Font size: A A A A
  
Home > Supplier Information > Air Travel > airline policies
Font size: A A A A

IATA Reports Grim Airline Prospects: Deep Recession, Bigger Losses

March 25, 2009 By: George Dooley


tac_deal_air01

The International Air Transport Association's (IATA) anticipated revised outlook for the global air transport industry makes grim reading. IATA forecasts losses of $4.7 billion in 2009, significantly worse than IATA’s December forecast for a $2.5 billion loss. The new estimates reflects the rapid deterioration of global economic conditions.

Industry revenues are expected to fall by 12 percent ($62 billion) to $467 billion. By comparison, the previous revenue decline, after the events of September 11, 2001, saw industry revenues fall by $23 billion over the period of 2000 to 2002 (approximately 7.0 percent.

“The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago. Our loss forecast for 2009 is now $4.7 billion. Combined with an industry debt of US$170 billion, the pressure on the industry balance sheet is extreme,” said Giovanni Bisignani, IATA’s director general and CEO.

Demand is projected to fall sharply with passenger traffic expected to contract by 5.7 percent over the year. Revenue implications of this fall will be exaggerated by an even sharper fall in premium traffic. Cargo demand is expected to decline by 13.0 percent. Both are significantly worse than the December forecast of a 3.0 percent drop in passenger demand and a 5.0 percent fall in cargo demand. Yields are expected to drop by 4.3 percent.

Falling fuel prices are helping to curb even larger losses, IATA said. With an expected fuel price of $50 per barrel (Brent oil), the industry’s fuel bill is expected to drop to 25 percent of operating costs (compared to 32 percent in 2008 when oil averaged $99 per barrel). Combined with lower demand, total expenditure on fuel will fall to $116 billion (compared to $168 billion in 2008).

“Fuel is the only good news. But the relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care. Airlines face two immediate fundamental challenges: conserving cash and carefully matching capacity to demand,” said Bisignani.

IATA also revised its forecast losses for 2008 from $5.0 billion to $8.5 billion. The fourth quarter of 2008 was particularly difficult as carriers reported large hedging-related losses and a very sharp fall in premium travel and cargo traffic.

Regional differences remain significant. In North America, carriers are expected to deliver the best performance for 2009 with a combined $100 million profit. A 7.5 percent fall in demand is expected to be matched by a 7.5 percent cut in capacity. Despite the worsening economic conditions, this is relatively unchanged from the earlier forecast of a $300 million profit. Carriers are benefiting from careful capacity management and lower spot prices for fuel.

“The prospects for airlines are dependent on economic recovery. There is little to indicate an early end to the downturn. It will be a grim 2009. And while prospects may improve towards the end of the year, expecting a significant recovery in 2010 would require more optimism than realism,” said Bisignani.


What do you think of this $type?
 

This comprehensive guide begins at Alfava Metraxis and ends at Doctor Who Magazine wins the ACE Press Award 0 Following its record breaking ABC figure earlier this year, Doctor Who Magazine had cause for further celebration at the 2014 ACE Press Awards held https://www.levitradosageus24.com/ viagra bedeutung online apotheke at the Museum of London. This may take a second or two.