Airlines set for $5bn loss this year
A bleak picture has been painted for the airline industry with losses of $5 billion this year and $2.5 billion in 2009.
All regions, except the US, are expected to report larger losses in 2009 than this year, according to IATA.
Losses for European carriers will increase ten-fold to $1 billion as Europe’s main economies are already in recession.
Hedging has locked in high fuel prices for many of the region’s carriers in US dollar terms, and the weakened euro is exaggerating the impact, according to the industry body.
Industry-wide revenues are expected to decline to $501 billion, a fall of $35 billion from the $536 billion in forecast for 2008.
The slump is the first since the two consecutive years of decline in 2001 and 2002.
IATA updated its forecast for 2008 to a loss of $5 billion, a slight improvement from the $5.2 billion loss projected in September, primarily as a result of the rapid decline in fuel prices.
Passenger traffic in 2009 is expected to decline by 3% following growth of 2% in 2008, giving the first drop since the 2.7% slowdown in 2001.
The 2009 oil price is expected to average $60 per barrel for a total bill of $142 billion – $32 billion lower than this year when oil averaged $100 per barrel.
IATA director general Giovanni Bisignani said: “The outlook is bleak. The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years.â€
The reduction in industry losses from 2008 to 2009 is primarily due to a shift in the results of North American carriers.
Airlines in the region were hardest hit by high fuel prices with very limited hedging and are expected to post the largest industry losses for 2008 at $3.9 billion.
An early 10% domestic capacity reduction in response to the fuel crisis has given US carriers a head-start in combating the recession-led fall in demand.
The lack of hedging is now allowing the region’s carriers to take full advantage of rapidly declining spot fuel prices.
As a result, North American carriers are expected to post a small profit of $300 million in 2009.
“North America will be the only region in the black, but the expected $300 million profit is less than 1% of their revenue. 2009 will be another tough year for everyone,†said Bisignani.
All other regions will show losses, IATA warned.
Bisignani said the ferocity of the economic crisis has overshadowed any gains made and airlines are struggling to match capacity with the expected 3% drop in passenger demand for 2009.
“The industry remains sick. And it will take changes beyond the control of airlines to navigate back into profitable territory,†he added.
by Phil Davies
Phil Davies
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Airlines suspend Madagascar services following unrest and army revolt
TAP Air Portugal to operate 29 flights due to strike on December 11
Qatar Airways offers flexible payment options for European travellers
Air Mauritius reduces frequencies to Europe and Asia for the holiday season
Airbnb eyes a loyalty program but details remain under wraps