The World’s airlines will collectively lose $9 billion this year-nearly double the previous projections, and face a slow recovery as the economic crisis saps air travel and cargo demand, an industry has warned.
The International Air Transport Association (IATA), which represents 230 airlines world-wide, increased its loss estimate from the $4.7 billion it forecast in March, reflecting a “rapidly deteriorating revenue environment.”
Although, there has been growing signs of a bottoming out of the recession, IATA said the industry was severally hit in the first quarter with 50 major airlines reporting losses of more than $ 3 billion. Weak consumer confidence, high business inventories and rising oil prices pose headwinds for future recovery, the association said during a two-day global aviation confidence in Kuala Lumpur.
But revenues are expected to decline by $ 80 billion-and unprecedented 15 per cent from a year ago-to $448 billion this year, and the weakness will persist into 2010, IATA said.
“These is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaking. This is the most difficult situation that the industry has faced,” said IATA Chief executive, Giovanni Bisignani.
He said passengers traffic for 2009 is expected to contract by eight per cent from a year to 2.06 billion travelers. Cargo demand will decline by 17 per cent and some 100,000 jobs world wide are at risk.
The head of the Geneva-based airline lobby lambasted “greedy speculation” in oil markets and accused governments of squandering money raised from aviation while carriers suffer from still lumping demand.
However, John Leahy, Commercial director at European aircraft manufacturer Airbus, said that while 2009 would be tough, plans by United Airlines to order as many as 150 new planes from Airbus or rival Boeing Co, showed the market was starting to turn.
Cancellations are not as much of an issue as deferrals. I don’t think we’ll have that many more cancellations,” leahy told newsmen.
While IATA has repeatedly warned of a grim year for carriers as global recession shrinks passenger demand and weak financing drives down cargo trade, the conditions have worsened after the outbreak of HINI Swine flu that caused a world wide health scare and as oil prices until recently, a sole bright spot on the horizon after peaking near $ 150 a barrel last year-dimb down prices for jet fuel in Singapore have jumped almost 60 per cent since bottoming out at $46 a barrel in March.
Still, IATA estimates the industry fuel bill will decline by $ 59 billion to $106 billion in 2009 or 25 per cent of costs versus 31 per cent in 2008, a year of extra-ordinary volatility.