Airlines getting over the worst of recession?
Monday, 27 Oct, 2009
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Airlines worldwide are expected to see collective losses fall next year.
But a return to net profit is not expected until 2011, according to IATA.
The global aviation body expects losses this year to hit $11 billion, up from IATA’s previous forecast of $9 billion.
Losses in 2010 are expected to be cut to $3.8 billion but weak yields mean a return to profit “looks unlikely” until 2011.
IATA director general Giovanni Bisignani said: “Unless major economies go into a further down-leg of recession, the passenger market appears to have reached a floor in the second quarter. By July-August there were some early signs of an upturn in travel volumes.
“However, airlines face exceptionally weak yields on both passenger and freight markets.
“Premium and economy passenger fares were down 22% and 18% respectively in June, indicating that the recovery in passenger load factors to early-2008 levels has done little more than arrest the fall in fares.”
He warned that rising fuel costs – projected to go up from an average of $61 a barrel this year to $72 a barrel in 2010 – will further squeeze airline operating cash flows.
The reluctance by banks to lend freely and ownership restrictions on equity finance mean that many smaller and medium-sized airlines “remain in a much more fragile financial condition”.
by Phil Davies
Phil Davies
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