Tuesday, September 15, 2009

'Airline Situation Getting Worse,' Global Airlines Now Seen Losing $11 billion This Year

The International Air Transport Association today sharply revised its previous forecast for the amount of losses in the global airline business, saying total losses should be about $11 billion for 2009. The trade group's previous estimate was $9 billion.

Giovanni Bisignani, the director of the group, issued a dire new forecast in a Web conference this morning. "Yields have fallen dramatically," he said, adding that IATA had "never seen anything similar" in its 65-year history representing the interests of worldwide airlines.

Some key factors contributing to those mounting losses, according to IATA:

--A 20 percent decline in premium traffic, compared with a 5 percent decline in economy-class travel

--Overall revenues off $80 billion compared with 2008, when revenues were about $535 billion.

IATA's new forecast sees North American airlines losing $2.6 billion this year, while Asia-Pacific airlines stand to lose $3.6 billiom and those in Europe 3.8 billion. Losses in other regionals add up to the total $11 billion.

"The situation you see with the yields going down could be a long-term disaster," said Bisignani, who noted that in previous crises, yields took many years to begin growing again. Instead, he said, the current dire revenue picture could portend "a long-lasting structural change" in air travel.

Bisignani said that the total industry losses in 2008 and 2009 would amount to $27.8 billion.


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