World airlines face losses of $US27.8 billion ($32.26 billion) for 2008 and 2009 as the global economic downturn takes a heavier toll than the September 11 attacks, industry association IATA warned on Tuesday.
"That is larger than the losses of $US24.3 billion ($28.2 billion) the industry lost in 2001 and 2002 after the attacks of September 11," said Giovanni Bisignani, head of the International Air Transport Association.
As the economic crisis put the brakes on travel, losses booked by airlines around the world reached $US16.8 billion ($19.49 billion) in 2008.
IATA on Tuesday hiked its loss forecast for 2009 to $US11 billion ($12.76 billion) from the $US9.0 billion ($10.44 billion) forecast earlier while a $US3.8 billion ($4.41 billion) deficit was predicted for 2010.
"The outlook for 2010 is for more widespread, but still weak, economic growth ... Losses will diminish but a recovery to net profit looks unlikely until 2011," IATA said.
Bisignani noted that passenger volumes are expected to improve, showing a decline of 4 per cent for the year, up from a June forecast for a fall of 8 per cent.
"Unfortunately, these better volumes have a limited impact on the bottomline ... the reason is that the yield has fallen dramatically," he said.
Business and first class traffic, where airlines typically make most of their money, was down some 21 per cent in June, compared with 5 per cent for economy class, Bisignani said.
To business passengers, airlines have heavily discounted fares for these premium seats, thereby also diminishing yields.
At the same time, as expectations of a world economic recovery grow, fuel prices are rising, further depressing airline earnings.
"Prices of fuel are increasing in anticipation of the recovery that we do not see in our business," lamented Bisignani.
"Even with better volumes, we don't see industry revenues returning to 2008 levels until 2012-2013," he said, pointing out that following the September 11 attacks, it took 3.5 years to recover lost revenues.
European carriers are expected to be worst hit this year, with losses of $US3.8 billion ($4.41 billion), twice as much as the $US1.8 billion ($2.09 billion) initially predicted as long-haul markets are hit badly.
Asian-Pacific airlines should post losses of $US3.6 billion ($4.18 billion), slightly up from the previous forecast of $US3.3 billion ($3.83 billion). While they suffered the most damage in 2008, these carriers are expected to be among the first to benefit from recovering Asian economies.
North American carriers should lose $US2.6 billion ($3.02 billion), more than twice the earlier estimate of $US1 billion ($1.16 billion), said IATA, noting that high levels of debt and unemployment will likely hold back travel demand.
Middle Eastern and African airlines are each expected to lose $US500 million ($580.15 million) while Latin American carriers should break even.
AFP
