The global airline industry is facing $11bn (£6.7bn) in losses in 2009, some $2bn worse than predicted earlier in the year, as fuel costs go up and demand continues to go down, the International Air Transport Association (Iata) said yesterday.
The loss estimates for last year have also been revised upwards, from $10bn to $17bn, reflecting clarification of accounting treatments of large revaluations of goodwill and fuel hedges.
The crisis in the industry is worse that that following the 9/11 terrorist attacks, according to Giovanni Bisignani, the Iata director general. And it is not just a short term problem. “Some $80bn will disappear from the industry’s top line, and that 15 per cent of lost revenue will take years to recover,” Mr Bisignani said. “The global economic storm may be abating, but airlines have not yet found safe harbor. The crisis continues.”
The three factors behind such massive losses are falling demand, falling yields and rising oil prices. Passenger traffic is now expected to decline by 4 per cent and cargo by 14 per cent this year, a slight improvement from June’s forecasts of 8 per cent and 17 per cent respectively. But yields are worsening and are now expected to drop by 12 per cent for passengers and 15 per cent for cargo, a 5 percentage point and 4 percentage point downward revision respectively since June. Meanwhile, oil prices are going up, driven by rosier economic expectations, adding around $9bn to take the industry’s total fuel bill to $115bn.
Mr Bisignani said: “The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot. Rising costs and falling yields have squeezed airline cash flows. The sharp decline in yields will leave a lasting mark on the industry’s structure. And revenues are not likely to return to 2008 levels until 2012 at the earliest.”
Against the backdrop of on-going problems in the sector, British Airways is terminating 125 temporary cabin staff contacts at the end of next month and accepting voluntary redundancy applications from another 140 full-time crew.Reuse content