Global airlines may lose $5B; U.S. carriers have best forecast
— -- The largest airline trade group predicted Tuesday that the world's airlines would lose nearly $5 billion this year, double what it forecast three months ago, but said U.S. carriers would fare best.
The International Air Transport Association, which represents more than 200 carriers worldwide, estimates the global industry will lose $4.7 billion this year because of the sharp falloff in travel demand caused by the global recession. Companies and leisure travelers are flying less because of actual cuts in income or a fear-driven desire to eliminate unnecessary spending.
"The state of the airline industry is grim," Giovanni Bisignani, IATA's CEO, said. "Demand has deteriorated much more rapidly ... than could have been anticipated even a few months ago."
In December, the organization forecast a loss of $2.5 billion, but now foresees a 12% year-over-year drop in airline revenue. Still, 2009 won't be the industry's worst. In 2001, the year of the Sept. 11 terrorist attacks on four jetliners, airlines worldwide lost a record $23 billion.
This year, airlines based in Asia, home to giant exporting countries including China and Japan, will be hit hardest, the association said. Japan's economic output is expected to shrink a dramatic 5.5% this year, for example.
European carriers also are feeling pressure. British Airways, Europe's biggest carrier, recently reported a loss for the nine months ending Dec. 31. Its CEO, Willie Walsh, has said the travel slump could last two years and force the airline to drop more flights and cut labor costs.
However, U.S. carriers are expected to weather the storm. The association said the U.S. industry could end the year with a $100 million profit, although Wall Street analysts predict not all carriers will make money.
U.S. carriers are better positioned for several reasons. Most large, traditional carriers have undergone Chapter 11 bankruptcy restructuring since 2002.
And last year, amid record high jet fuel prices, they started parking airplanes and reducing flights to save fuel. Their efficiency cuts came sooner than at airlines in other parts of the world.
