16-Sep-2009 10:53 AM

IATA widens airline industry loss forecast, 2012 until revenues recover

IATA announced (15-Sep-2009) the following revised global financial forecasts:

  • 2008:
    • Net losses: Revised from USD10.4 billion to a loss of USD16.8 billion, reflecting accounting treatment of very large revaluations to goodwill and fuel hedges;
  • 2009:
    • Revenue: USD455 billion, down USD80 billion, approximately 15% year-on-year;
    • Losses: USD11 billion, an increase of USD2 billion over previous projected losses (Jun-2009), due to rising fuel prices and exceptionally weak yields;
    • Demand:
      • Passenger traffic: -4.0% year-on-year, compared to -8.0% in the June forecast;
      • Cargo traffic: -14% (June forecast: -17%);
    • Passenger yield: -12% (June forecast: -7%);
    • Cargo yield: -15% (June forecast: -11%);
    • Fuel: USD61 per barrel (Brent) for (June forecast: USD56 per barrel). Industry fuel costs forecast increased from USD106 billion to USD115 billion.
    • Regional forecasts:
      • North America: USD2.6 billion net loss (June forecast: USD1.0 billion loss);
      • Europe: USD3.8 billion net loss (June forecast: USD1.8 billion loss);
      • Asia-Pacific: USD3.6 billion net loss (June forecast: USD3.3 billion loss);
      • Latin American: Forecast break even (June forecast: USD900 loss);
      • Middle East: USD500 million loss (June forecastUSD1.5 billion loss);
      • Africa: USD500 million, outlook unchanged.
  • 2010:
    • Losses: USD3.8 billion, based on a “limited revival of growth in traffic volumes”
    • Demand:
      • Passenger traffic: +3.2% year-on-year;
      • Cargo traffic: +5%;
    • Passenger yields: +1.1%
    • Cargo yields: +0.9%. [more]

IATA: “The bottom line of this crisis - with combined 2008-9 losses at USD27.8 billion - is larger than the impact of 9/11. This is not a short-term shock. USD80 billion will disappear from the industry’s top line. That 15% of lost revenue will take years to recover. Conserving cash, careful capacity management and cutting costs are the keys to survival… The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot. Rising costs and falling yields have squeezed airline cash flows. The sharp decline in yields will leave a lasting mark on the industry’s structure. And revenues are not likely to return to 2008 levels until 2012 at the earliest,” Giovanni Bisignani, Director General & CEO. Source: IATA, 15-Sep-2009.

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