IATA: Airlines to lose $3bn this year


SOARING oil prices will mean losses of $3 billion for global airlines this year, industry lobby group IATA said, raising its forecast from $2.2 billion as fuel woes outpace cost-cutting efforts.

The figure for now remains below the loss of $3.2 billion for 2005, but IATA chief executive Giovanni Bisignani told the group’s annual meeting in Paris that uncertainty remained.
“Oil is the wild card. Prices are racing ahead of efficiency gains and robbing our profitability,” he said in a speech on the state of the industry.
“The industry fuel bill will top $112 billion this year – $21 billion more than 2005,” said the International Air Transport Association, which represents 261 airlines handling 94 percent of the world’s scheduled air traffic.
Increased revenues of 10 per cent in each of the last three years and cost-cutting efforts have helped buffer airlines, reducing non-fuel costs by 13 per cent since 2001. “(Such) efforts have moved the break-even fuel price from $14 per barrel to $50,” said Bisignani, illustrating the dilemma for carriers with crude oil prices now near record levels.
Fuel is expected to make up 26 per cent of airlines’ average costs in 2006 compared with 22 percent the previous year. In order to make money, airlines need on average to fill 63.3 per cent of their available capacity by weight in 2006, but are only expected to manage 62.4 per cent.
Bisignani said governments need to remove barriers which are holding back the sector's efforts to be more efficient.