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Airlines to post record-breaking losses

Airlines to post record-breaking losses

Airlines are predicted to lose a total of $11 billion this year according to IATA – $2 billion worse than previously predicted.

The impact of the recession on the airline industry is “worse than the impact of 9/11,” according to IATA CEO Giovanni Bisignani.

He predicted that losses would continue until 2010 and revenues would not return to last year’s levels until 2012 – at the earliest.

IATA also revised its 2008 loss estimates, adding a further $6 billion to the total, taking total losses last year to $16.8 billion.

“The bottom line of this crisis – with combined 2008-2009 losses at US$27.8 billion – is larger than the impact of 9/11,” said Bisignani.


Industry losses for 2001-2002 were US$24.3 billion.

“This is not a short-term shock. US$80 billion 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.

“The global economic storm may be abating, but airlines have not yet found safe harbour. The crisis continues,” said Bisignani.

He added: “And revenues are not likely to return to 2008 levels until 2012 at the earliest.”

He criticised governments – particularly European ones – for their “fixation” on green taxes and called on them to invest in efficient infrastructure and relaxing restrictions on mergers and acquisitions.

IATA also predicts that industry revenues for the year will fall by 15% or $80 billion to $455 billion compared with 2008 levels.

The three main factors driving the expected losses are: demand, which is expected to drop by 4%; yields, which are expected to fall 12% compared to 7% in the June forecast.

The fall in yields is led by the 20% drop in demand for premium travel.

And fuel, which continues to rise and is expected to average $61 per barrel for the year.

The crisis is worldwide, with European carriers expected to post the largest losses of $3.8 billion, more than double the previous forecast.

The key reason is the drop off in demand to high yield international routes.

In the US, carriers are expected to post losses of $2.6 billion, again more than double the previous forecast, despite huge cuts in capacity.

Asia-Pacific carriers are predicted to make a $3.6 billion loss; Latin American carriers will break even and Middle East and African carriers will lose $0.5 billion each.