50% of airlines expect profits to fall
The outlook for aviation is getting worse with 50% of carriers expecting a fall in profits for 2009, the latest Airline Confidence Index says.
The Index, drawn up by the International Air Transport Association (IATA), said airlines' hopes for a rise in passenger traffic had "deteriorated sharply" since the last survey three months ago.
Half the respondents to IATA's poll said traffic had dropped in the last year while only a quarter expected demand to grow in 2009.
IATA said that for the fourth successive quarter, airlines did not expect to make a profit over the next 12 months while 80% said their profitability had dropped in the last three months of 2008.
Many had not yet benefitted from the fall in the price of fuel and were now suffering from losses on fuel hedging with fewer than 10% expecting profitability to increase.
IATA said: "Losses on fuel hedging and softening demand are cited as the main causes of the decline in profitability."
The 50% of airlines reporting a drop in demand in the last quarter was in "stark contrast" to the 75% which reported an increase in the previous survey on business confidence.
"Economic recession is quoted by many respondents as being a key driver of this change in the demand pattern.
"Looking forward, almost half the respondents now expect to see lower passenger volumes in the next 12 months with less than a quarter expecting an increase," IATA said.
Hopes that revenues might increase had also "weakened sharply" since the last survey.
A third of the respondents had experienced steady yields in the past three months while 38.9% had suffered reduced revenues.
But this was in "stark contrast" to the 71.4% in the previous survey who said their yields had increased.
One of the few bright spots in the index was that most airlines were not shedding staff.
IATA said that many of its respondents reported increases in staff levels because of the delivery of new aircraft or the introduction of new routes.
It said that "slightly less than half" had kept staff levels constant, 37.5% had increased them and 16.7% had cut staff numbers.
www.iata.org