Airlines brace for turbulent 2010

Industry forecasts losses of $5.6bn next year

    Airline association, Iata, predicts industrywide losses will hit $11bn this year and $5.6bn in 2010 [AFP]

    The industry group maintained its estimate of $11bn full-year losses for 2009.

    'Worst behind us'

    Giovanni Bisignani, the Iata chief executive, said 2009 had been an "annus horribilis" for the sector, but added that "the worst is likely behind us".


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    "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."

    Still, he conceded that "airlines will remain firmly in the red in 2010."

    Passenger traffic fell 4.1 per cent in 2009, from the already-low levels they reached in 2008 when financial markets collapsed, and premium fares fell the hardest. Cargo traffic, meanwhile, declined 13 per cent.

    The US carriers that were being counted on to lead the industry toward recovery have lost an estimated $2.9bn in 2009.

    European airlines and Asia-Pacific carriers both lost around $3.5bn, while the Middle East had a negative result of $1.2bn.

    The biggest improvement is expected to come from carriers in the Asia-Pacific, while Latin America is expected to be the only profitable regional group next year.

    "Everybody working in an airline must understand that you have to fasten your seatbelt in turbulent moments," Bisignani said.

    Iata represents 240 airline companies worldwide that account for more than 90 per cent of scheduled air traffic, but does not include most of the budget airlines.

    After 30 airlines were eliminated in 2009, Bisignani said the big carriers were healthier now as a result of $38bn in cash they have raised this year.

    Cheap fares

    Iata said it expects passenger traffic to bounce back by 4.5 percent in 2010, with nearly 2.3 billion people travelling.

    "We've seen the cost of air travel come down very substantially so far this year, and that's likely to continue  ... But it's still a very difficult environment for airlines to make profits in"

    Brian Pearce, Iata chief economist

    While Iata predicts cargo demand will grow by 7 per cent, but remain significantly below the peak traffic of 41.8 million tonnes in 2007.

    "This has been the worst industry year that we have had, however the cargo industry is leading economies into recovery," Brian Pearce, the Iata chief economist, told Al Jazeera.

    "We've seen the cost of air travel come down very substantially so far this year, and that's likely to continue. This is very good news for passengers and shippers but it's still a very difficult environment for airlines to make profits in."

    In a sign of the troubles facing international airlines, British Airways, Europe's third biggest airline, is facing mass disruptions over the Christmas holiday period.

    On Tuesday, the airline sought a court injunction to prevent a 12-day strike by cabin crew on Tuesday, in a dispute over job cuts and changes to staff contracts.

    BA said it was seeking to stop the planned walkout on the grounds that the Unite union ballot of up to 13,000 members contained "irregularities,'' which it believes makes the outcome of the vote invalid.

    The strike is set to take place from December 22 to January 2.

    SOURCE: Al Jazeera and agencies


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