Airline Industry to Lose $5.6bn in 2010

15.12.2009 Aviation & Space

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The International Air Transport Association (IATA) revised its financial outlook for 2010 to an expected $5.6 billion global net loss, larger than the previously forecast loss of $3.8 billion.


For 2009, IATA maintained its forecast of an $11 billion net loss. The Middle East carriers, the association said, will see losses shrink from a $1.2 billion in 2009 to a $300 million deficit in 2010.

'A strong long-haul connection business over Middle East hubs will provide some insulation against the impacts of Dubai's financial difficulties, the Association said in its latest forecast for the airline industry.

"The world's airlines will lose $11 billion in 2009. We are ending an Annus Horribilis that brings to a close the 10 challenging years of an aviation Decennis Horribilis. Between 2000 and 2009, airlines lost $49.1 billion, which is an average of $5 billion per year," said Giovanni Bisignani, IATA's Director General and CEO.

"The worst is likely behind us. For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3 per cent. But fuel costs are rising and yields are a continuing disaster. Airlines will remain firmly in the red in 2010 with $5.6 billion in losses," said Bisignani.

In its latest forecast, the IATA said the industry revenues were expected to rise by $22 billion to $478 billion in 2010, compared to 2009. However, revenues remain $57 billion below the peak of $535 billion in 2008 and $30 billion below 2007 when passenger traffic was at similar levels to what is expected in 2010.

On the passenger demand, IATA said, 'Following a decline of 4.1 per cent in 2009, passenger traffic is expected to grow by 4.5 per cent in 2010 (stronger than the previously forecast 3.2 per cent in September).

A total of 2.28 billion people are expected to fly in 2010, bringing total passenger numbers back in line with the peak recorded in 2007.

The cargo demand was expected to grow by seven per cent to 37.7 million tonnes in 2010 (stronger than the previously forecast five per cent in September), following a 13 per cent decline in 2009.

The total freight volumes will remain 10 per cent below the 41.8 million tonne peak recorded in 2007.

Cargo demand is rising faster than world trade as depleted inventories are rebuilt. Once the inventory cycle completes, growth is expected to fall back in line with world trade.

"The number of travelers will be back to the peak levels of 2007, but with $30 billion less in revenues. The $38 billion cash cushion built up throughout this year will help airlines survive through the low season, but there is no recovery in sight for 2010. Tough times continue," Bisignani added.




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