Already-battered airlines are projected to lose $11 billion in 2009, $2 billion more than IATA's original loss forecast of $9 billion.
The industry continues to suffer from weak yields driven by drastic drops in premium demand and rising fuel costs. IATA's revisions to its financial forecasts show a 12% and 15% drop in passenger and cargo yields for 2009 compared with projections released in June of a 7% decline in passenger yields and 11% decline cargo yields.
"We are in intensive care," IATA director general Giovanni Bisignani told reporters today in Washington, DC. "The crisis is not over."
Despite carrier capacity reductions to better match supply and demand IATA chief economist Brian Pearce says excess capacity still remains in the marketplace, which is contributing to the decline in yields.
Carriers hoping to recapture some of the yield degradation face challenges as Bisginani warns after every crisis "you never see yields return to their starting points".
IATA projects the combined industry losses for 2008 and 2009 of $27.8 billion should surpass the $24.3 billion in combined losses for 2001 and 2002. The association also widened its loss estimates for 2008 from $10.4 billion to $16.8 billion to reflect accounting treatment of large re-evaluations of goodwill and fuel hedges.
European airlines are bracing for the largest losses of $3.8 billion while IATA's projections show Asia Pacific airlines posting $3.3 billion in losses.
Carriers in Latin America should post the best performance as IATA predicts those airlines will break even as economies the region's countries are more robust and its residents have less of consumer debt headwind than North America.
IATA has revised loss projections for Middle Eastern carriers from $1.5 billion to $0.5 billion, while expected losses of $0.5 billion in Africa remain unchanged.
Overall industry revenues are projected to fall by 15% this year, or $80 billion. "That will take years to recover," says Bisignani.
IATA's projects carriers will lose $3.8 billion in 2010 and is also warning of a rise in the average fuel price from $61 per barrel in 2009 to $72 in 2010.
Source: Air Transport Intelligence news
