ID :
52085
Tue, 03/24/2009 - 18:05
Auther :
Shortlink :
http://m.oananews.org//node/52085
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IATA PREDICTS BIGGER LOSS OF US$4.7 BIL GLOBALLY
By Saraswathi Muniappan
KUALA LUMPUR, March 24 (Bernama) -- The International Air Transport
Association (IATA) has revised its outlook for the global air transport industry
this year, projecting a deeper loss of US$4.7 billion compared with its December
forecast of a loss of US$2.5 billion for 2009.
It cited the rapid deterioration in global economic conditions as the reason
for the drop.
"The state of the airline industry today is grim. Demand has deteriorated
much more rapidly with the economic slowdown than could have been anticipated
even a few months ago. Our loss forecast for 2009 is now US$4.7 billion.
Combined with an industry debt of US$170 billion, the pressure on the industry
balance sheet is extreme," said IATA's director general and chief executive
officer, Giovanni Bisignani in a teleconference from Geneva.
He said industry revenues are expected to fall by 12.0 percent (US$62
billion) to US$467 billion. By comparison, the previous revenue decline, after
the events of Sept 11, 2001, saw industry revenues fall by US$23 billion over
the period of 2000 to 2002 (approximately 7.0 percent).
Demand is projected to fall sharply with passenger traffic expected to
contract by 5.7 percent over the year. Revenue implications of this fall will be
exaggerated by an even sharper fall in premium traffic.
Cargo demand is expected to decline by 13 percent.
Both are significantly worse than the December forecast of a three percent
drop in passenger demand and a five percent fall in cargo demand. Yields are
expected to drop by 4.3 percent, he said.
Falling fuel prices are helping to curb even larger losses, he said, adding
that with an expected fuel price of US$50 per barrel (Brent oil), the industry's
fuel bill is expected to drop to 25 percent of operating costs (compared to
32 percent in 2008 when oil averaged US$99 per barrel).
Combined with lower demand, total expenditure on fuel will fall to US$116
billion (compared to US$168 billion in 2008).
"Fuel is the only good news. But the relief of lower fuel prices is
overshadowed by falling demand and plummeting revenues. The industry is in
intensive care. Airlines face two immediate fundamental challenges: conserving
cash and carefully matching capacity to demand," said Bisignani.
IATA also revised its forecast losses for 2008 from US$5.0 billion to US$8.5
billion. The fourth quarter of 2008 was particularly difficult as carriers
reported large hedging-related losses and a very sharp fall in premium travel
and cargo traffic.
As for regional market, he said Asia Pacific carriers will be continuously
the hardest hit by the current economic turmoil and are expected to post losses
of US$1.7 billion (significantly worse than the previous loss forecast of US$1.1
billion).
Japan, the region's largest market is expected to see GDP drop by 5.5
percent in 2009 with exports already in freefall. China has been successful in
stimulating demand in domestic markets with pricing adjustments.
International demand to and from China is expected to contract by between
five percent and 10 percent over the year.
India, whose market for international air services tripled in size between
2000 and 2008, is expected to see capacity increase by 0.7 percent in 2009,
while demand drops between two and three percent.
Overall, the region is expected to see a 6.8 percent fall in demand but only
a 4.0 percent drop in capacity.
North American carriers in this region are expected to deliver the best
performance for 2009 with a combined US$100 million profit.
A 7.5 percent fall in demand is expected to be matched by a 7.5 percent
cut in capacity. Despite the worsening economic conditions, this is relatively
unchanged from the earlier forecast of a US$300 million profit. Carriers are
benefiting from careful capacity management and lower spot prices for fuel.
Europen carriers are expected to lose US$1 billion in 2009.
A forecast 2.9 percent fall in the continent's GDP is expected to result in
a drop in demand of 6.5 percent. Capacity cuts of 5.3 percent will not keep pace
with the fall in demand, driving yields and profitability down.
Latin America is forecast to maintain positive GDP growth in 2009, the
collapse in demand for commodity products is expected to see traffic plunge by
7.8 percent. Carriers are only expected to be able to drop capacity by 3.8
percent resulting in losses of US$600 million.
African carriers are expected to see losses of US$600 million this year.
This will be six times the US$100 million loss in 2008. The continent's carriers
are losing market share on long-haul routes. Demand is expected to drop by 7.8
percent with only a 6.0percent fall in capacity.
Middle East will be the only region with demand growth in 2009 (+1.2
percent). But this will be overshadowed by the impact of a 3.8 percent increase
in capacity. While this is significantly below the double-digit growth of
previous years, the region continues to add capacity ahead of demand. The result
is expected to be a loss of US$900 million (a slight deterioration from the
US$800 million loss recorded in 2008).
Looking ahead, he said much of the deterioration forecast for 2009 had
already happened by January. As manufacturers end their de-stocking there should
be a modest bounce in air freight as component shipping rises a little. But weak
consumer and business confidence is expected to keep spending and demand for air
transport low.
"The prospects for airlines are dependant on economic recovery. There is
little to indicate an early end to the downturn. It will be a grim 2009. And
while prospects may improve towards the end of the year, expecting a significant
recovery in 2010 would require more optimism than realism," said Bisignani.
Bisignani also cautioned that this crisis must bring change. "Recovery will
not come without change. There is no doubt that this is a resilient industry
capable of catalysing economic growth. But we are structurally sick. The
historical margin of this hyper-fragmented industry is 0.3 percent.
"Bail-outs are not the prescription to return to health. Access to global
capital, the ability to merge and consolidate and the freedom to access markets
are needed to run this industry as normal, profitable business. This is IATA's
Agenda for Freedom-and a very cost effective solution for governments desperate
to stimulate their economies," said Bisignani.
-- BERNAMA
KUALA LUMPUR, March 24 (Bernama) -- The International Air Transport
Association (IATA) has revised its outlook for the global air transport industry
this year, projecting a deeper loss of US$4.7 billion compared with its December
forecast of a loss of US$2.5 billion for 2009.
It cited the rapid deterioration in global economic conditions as the reason
for the drop.
"The state of the airline industry today is grim. Demand has deteriorated
much more rapidly with the economic slowdown than could have been anticipated
even a few months ago. Our loss forecast for 2009 is now US$4.7 billion.
Combined with an industry debt of US$170 billion, the pressure on the industry
balance sheet is extreme," said IATA's director general and chief executive
officer, Giovanni Bisignani in a teleconference from Geneva.
He said industry revenues are expected to fall by 12.0 percent (US$62
billion) to US$467 billion. By comparison, the previous revenue decline, after
the events of Sept 11, 2001, saw industry revenues fall by US$23 billion over
the period of 2000 to 2002 (approximately 7.0 percent).
Demand is projected to fall sharply with passenger traffic expected to
contract by 5.7 percent over the year. Revenue implications of this fall will be
exaggerated by an even sharper fall in premium traffic.
Cargo demand is expected to decline by 13 percent.
Both are significantly worse than the December forecast of a three percent
drop in passenger demand and a five percent fall in cargo demand. Yields are
expected to drop by 4.3 percent, he said.
Falling fuel prices are helping to curb even larger losses, he said, adding
that with an expected fuel price of US$50 per barrel (Brent oil), the industry's
fuel bill is expected to drop to 25 percent of operating costs (compared to
32 percent in 2008 when oil averaged US$99 per barrel).
Combined with lower demand, total expenditure on fuel will fall to US$116
billion (compared to US$168 billion in 2008).
"Fuel is the only good news. But the relief of lower fuel prices is
overshadowed by falling demand and plummeting revenues. The industry is in
intensive care. Airlines face two immediate fundamental challenges: conserving
cash and carefully matching capacity to demand," said Bisignani.
IATA also revised its forecast losses for 2008 from US$5.0 billion to US$8.5
billion. The fourth quarter of 2008 was particularly difficult as carriers
reported large hedging-related losses and a very sharp fall in premium travel
and cargo traffic.
As for regional market, he said Asia Pacific carriers will be continuously
the hardest hit by the current economic turmoil and are expected to post losses
of US$1.7 billion (significantly worse than the previous loss forecast of US$1.1
billion).
Japan, the region's largest market is expected to see GDP drop by 5.5
percent in 2009 with exports already in freefall. China has been successful in
stimulating demand in domestic markets with pricing adjustments.
International demand to and from China is expected to contract by between
five percent and 10 percent over the year.
India, whose market for international air services tripled in size between
2000 and 2008, is expected to see capacity increase by 0.7 percent in 2009,
while demand drops between two and three percent.
Overall, the region is expected to see a 6.8 percent fall in demand but only
a 4.0 percent drop in capacity.
North American carriers in this region are expected to deliver the best
performance for 2009 with a combined US$100 million profit.
A 7.5 percent fall in demand is expected to be matched by a 7.5 percent
cut in capacity. Despite the worsening economic conditions, this is relatively
unchanged from the earlier forecast of a US$300 million profit. Carriers are
benefiting from careful capacity management and lower spot prices for fuel.
Europen carriers are expected to lose US$1 billion in 2009.
A forecast 2.9 percent fall in the continent's GDP is expected to result in
a drop in demand of 6.5 percent. Capacity cuts of 5.3 percent will not keep pace
with the fall in demand, driving yields and profitability down.
Latin America is forecast to maintain positive GDP growth in 2009, the
collapse in demand for commodity products is expected to see traffic plunge by
7.8 percent. Carriers are only expected to be able to drop capacity by 3.8
percent resulting in losses of US$600 million.
African carriers are expected to see losses of US$600 million this year.
This will be six times the US$100 million loss in 2008. The continent's carriers
are losing market share on long-haul routes. Demand is expected to drop by 7.8
percent with only a 6.0percent fall in capacity.
Middle East will be the only region with demand growth in 2009 (+1.2
percent). But this will be overshadowed by the impact of a 3.8 percent increase
in capacity. While this is significantly below the double-digit growth of
previous years, the region continues to add capacity ahead of demand. The result
is expected to be a loss of US$900 million (a slight deterioration from the
US$800 million loss recorded in 2008).
Looking ahead, he said much of the deterioration forecast for 2009 had
already happened by January. As manufacturers end their de-stocking there should
be a modest bounce in air freight as component shipping rises a little. But weak
consumer and business confidence is expected to keep spending and demand for air
transport low.
"The prospects for airlines are dependant on economic recovery. There is
little to indicate an early end to the downturn. It will be a grim 2009. And
while prospects may improve towards the end of the year, expecting a significant
recovery in 2010 would require more optimism than realism," said Bisignani.
Bisignani also cautioned that this crisis must bring change. "Recovery will
not come without change. There is no doubt that this is a resilient industry
capable of catalysing economic growth. But we are structurally sick. The
historical margin of this hyper-fragmented industry is 0.3 percent.
"Bail-outs are not the prescription to return to health. Access to global
capital, the ability to merge and consolidate and the freedom to access markets
are needed to run this industry as normal, profitable business. This is IATA's
Agenda for Freedom-and a very cost effective solution for governments desperate
to stimulate their economies," said Bisignani.
-- BERNAMA
