THE International Air Transport Association (IATA) gave a revised outlook for the global air transport industry in 2009 with losses of $4.7 billion, a figure worse than its December forecast for a $2.5 billion loss in 2009.
Industry revenues are expected to fall by 12 per cent, by comparison the previous revenue decline, after the events of September 11, 2001, saw industry revenues decline approximately 7 per cent ($23 billion) over the period of 2000 to 2002.
“The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago. Our loss forecast for 2009 is now $4.7 billion. Combined with an industry debt of $170 billion, the pressure on the industry balance sheet is extreme,” said IATAs director general and CEO Giovanni Bisignani.
Demand is projected to fall sharply with passenger traffic expected to contract by 5.7 per cent over the year.
The Middle East will be the only region with a positive demand growth for this year of 1.2 per cent. But this will be
overshadowed by the impact of a 3.8 per cent increase in capacity. While
this is significantly below the double-digit growth of previous years, the region continues
to add capacity ahead of demand. The result is expected to be a loss of $900 million, a slight deterioration from the $800 million loss recorded in 2008.
Falling fuel prices are helping to curb even larger losses. With an expected fuel price of $50 per barrel (Brent oil), the industry’s fuel bill is expected to drop to 25 per cent of operating costs, compared to 32 percent in 2008 when oil averaged $99 per barrel. Combined with lower demand, total expenditure on fuel will fall to $116 billion, compared to $168 billion in 2008.
“Fuel is the only good news. But the relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care. Airlines face two immediate fundamental challenges: conserving cash and carefully matching capacity to demand,” noted Bisignani.
