Shortfall of $11bn forecast for 2009
Airline losses could total $11bn for the year, the International Air Transport Association (IATA) predicted today (September 15).
This is $2bn more than the airlines' Association forecast of $9bn in June. The June prediction was almost double the forecast in March of a $4.7bn deficit.
IATA said the revised prediction was based on rising fuel prices and "exceptionally weak yields."
It said it expected industry yields for the whole year to fall by 15% ($80bn) to $455bn compared to 2008 levels.
Regionally, IATA said it expected European carriers to make a $3.8bn loss, more than double what it originally forecast while the $2.6bn loss for North America carriers was also more than twice the $1bn originally predicted.
Figures for the three other regions were no so bad. Asia-Pacific carriers were predicted to make a $3.6bn loss against the original forecast of $3bn; Latin American airlines a $1.5bn loss ($500m) and African carriers a $500m loss.
The Association said it also now believed that airlines lost $16.8bn in 2008 rather than the original estimate of $10.4bn.
Giovanni Bisignani, IATA's director general and ceo, said: "The bottom line of this crisis - with combined 2008-9 losses at $27.8bn - is larger than the impact of 9/11."
Industry losses in 2001-02 were $24.3bn.
IATA said there were three main factors driving the 2009 losses:
- a 4% drop in passenger demand compared with 2008
- a 12% drop in yield from passengers, compared with a 7% drop in 2008 which was led by a 20% drop in premium traffic
- a sharp rise in spot fuel prices "in anticipation of improved economic conditions" which had put the price of a barrel at $61 compared to $56 in June.
The Association said there "little hope" of an early recovery in passenger yields.
Mr Bisignani said: "This is not a short-term shock. $80bn will disappear from the industry's top line.
"That 15% of lost revenue will take years to recover. Conserving cash, careful capacity management and cutting costs are the keys to survival."
He warned that revenue levels were not likely to return to 2008 levels until 2012 at the earliest.
He added: "With cash flows substantially down over the first half of the year, the situation is critical.
"Larger carriers have built-up cash reserves of $15bn - a war chest that is warding off a major cash crisis.
"But the outlook for small and medium sized carriers - with limited options to raise cash - is much more severe."
IATA said it expected losses in 2010 to be $3.8bn with the year seeing a limited growth in passenger traffic of 3.2%.
But it said yields would only rise by 1.1% and fuel prices would rise to $72 per barrel.