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Revenues down 12%
A loss of $4.7bn for the global airline industry in 2009 was today (March 24) predicted by the International Air Transport Association (IATA).
The Association said the revised forecast, after its prediction last December of a $2.5bn loss, reflected the "rapid deterioration of the global economic conditions."
It said it expected revenues to fall by 12% compared to 2008, a drop of $62bn to $467bn.
IATA said that after 9/11 terrorist attacks in the US, revenue dropped by about 7% (then $23bn) over the next year.
Giovanni Bisignani, IATA's director general and ceo, said: "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 $4.7bn. Combined with an industry debt of $170bn, the pressure on the industry balance sheet is extreme."
IATA forecast that demand in passenger traffic would fall by 5.7% in 2009 but there would be a "sharper fall" in premium traffic.
Yields, the Association said, would fall by 4.3%.
It said European carriers were expected to make a $1bn loss in 2009 with a 6.5% drop in demand.
A capacity cut of 5.3% would "not keep pace with" falling demands, driving both profitability and yields down.
IATA predicted a loss of $900m for the Middle East, $600m each for Africa and Latin America and $1.7bn for Asia Pacific.
Only North America was predicted to make of a profit of $100m.
Mr Bisignani said the only good news was the falling price of fuel which was helping to prevent "even larger losses."
He added: "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."
He said the industry was dependant on economic recovery but there was little to indicate an early end to the downturn.
Longer term, Mr Bisignani said the "structurally sick" airline industry needed access to capital, the ability to merge and consolidate and the freedom to access markets.