IATA halves industry loss outlook to USD2.8 billion in 2010, but sees two speed recovery

IATA releases its Mar-2010 airline industry outlook, cutting its forecast for losses in 2010 from USD5.6 billion (made in Dec-2009) to USD2.8 billion. IATA also lowered its 2009 loss estimate from USD11.0 billion to USD9.4 billion. The recovery is "two speed", according to IATA, with growth concentrated in emerging markets in Asia, Latin America and the Middle East, with airlines in developed markets facing more sluggish market growth.

• Forecast highlights:
  • Demand:
    • Passenger: Growth of 5.6% in 2010, compared to a 2.9% decline in 2009. Previous forecast of 4.5%.
    • Cargo: Growth of 12% in 2010, compared to an 11.1% decline in 2009. Previous forecast of 7.0%;
  • Yield:
    
    • Passenger: +2%, compared to a 14% decline in 2010;
    • Cargo: +3%, compared to a 14% decline in 2010;
  • Premium travel: Appears to be following a cyclical recovery in volumes, which are now 17% below 2008 peak. Premium yields 20% below peak and "may be suffering a structural shift";
  • Revenue: +9% to USD522 billion, USD44 billion higher than earlier forecast. Now "half way to recovery".

• Regional forecast:
  • Asia-Pacific: USD900 million profit, compared to USD2.9 billion loss in 2009. Demand expected to increase 12%. Recovery driven by China. Particularly strong cargo market;
  • Latin America: USD800 million profit, matching 2009. Demand expected to increase 12.2% in 2010.
  • Europe: USD2.2 billion loss, compared to USD3.8 billion loss in 2009. Demand forecast to increase 4.2% in 2010;
  • North America: USD1.8 billion loss, compared to USD3.1 billion loss in 2009. Demand forecast to increase 6.2% in 2010;
  • Middle East: USD400 million loss. Demand forecast to increase 15.2% in 2010;
  • Africa: US100 million loss, compared to USD200 million loss in 2009. Demand forecast to increase 7.4% in 2010.

IATA: "We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery. The weakest international markets are North Atlantic and intra-Europe which have continuously contracted since mid-2008… Important fundamentals are moving in the right direction. Demand is improving. The industry has been wise in managing capacity. Prices are beginning to align with the costs-premium travel aside. We can be optimistic but with due caution. Important risks remain. Oil is a wild-card, over-capacity is still a danger, and costs must be kept under control-throughout the value chain and with labour," Giovanni Bisignani, Director General and CEO. Source: IATA, 11-Mar-2010.