IATA Predicts a $2.5 Billion Airline Loss for 2009

The International Air Transport Association (IATA) forecast for 2009 shows an industry loss of $2.5 billion with all regions, except the U.S., expected to report larger losses in 2009 than in 2008. Calling it the worst revenue environment in 50 years, IATA said industry revenues are expected to decline to $501 billion. This a fall of $35 billion from the $536 billion in revenues forecasted for 2008. This drop in revenues is the first since the two consecutive years of decline in 2001 and 2002.

“The outlook is bleak. The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years,” said Giovanni Bisignani, IATA’s director general and CEO.

IATA also said airline yields will decline by 3.0 percent (5.3 percent when adjusted for exchange rates and inflation) and that passenger traffic is expected to decline by 3 percent following growth of 2 percent in 2008. This is the first decline in passenger traffic since the 2.7 percent drop in 2001. Cargo traffic will also decline, IATA said.

IATA also updated its forecast for 2008 to a loss of $5.0 billion. This is slightly improved from the $5.2 billion loss projected in IATA’s September forecast primarily as a result of the rapid decline in fuel prices.

The reduction in industry losses from 2008 to 2009 is primarily due to a shift in the results of North American carriers. Carriers in this region were hardest hit by high fuel prices with very limited hedging and are expected to post the largest industry losses for 2008 at $3.9 billion, IATA said.

An early 10 percent domestic capacity reduction in response to the fuel crisis has given the region’s carriers a head start in combating the recession-led fall in demand, IATA said. The lack of hedging is now allowing the region’s carriers to take full advantage of rapidly declining spot fuel prices. As a result, North American carriers are expected to post a small profit of $300 million in 2009, IATA reports.

“North America will be the only region in the black, but the expected $300 million profit is less than 1 percent of their revenue. 2009 will be another tough year for everyone,” said Bisignani. All other regions will show losses including Asia-Pacific, Europe, Latin America and Africa. Visit www.iata.org.

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