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Strong start prompts IATA to cut forecast losses

written by australianaviation.com.au | March 15, 2010

IATA has halved its industry loss forecast.
IATA has halved its industry loss forecast.

IATA has halved its forecast net loss for the global airline industry this year to US$2.8bn (A$3.06bn), noting that strong demand at the start of the year and flat capacity has led to some gain in yields, albeit driven by Asia Pacific and Latin America.

“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,” said Giovanni Bisignani, IATA’s director general and CEO.

The organisation now expects passenger demand to grow by 5.6 per cent this year instead of its previous forecast of 4.5 per cent, while cargo demand is expected to grow at 12 per cent compared to a previous forecast of seven per cent. As a result, it is expected that revenues will rise to US$522bn (A$570.5bn), a US$43bn (A$47bn) improvement on 2009.

“We can be optimistic but with due caution,” remarked Bisignani. “Important risks remain. Oil is a wildcard, over-capacity is still a danger, and costs must be kept under control – throughout the value chain and with labour.”

By region, Asia Pacific carriers are expected to lead the way, posting profits of US$900m (A$984m), driven by strong growth in China which will increase demand for both cargo and passenger services. This will be followed by US$800m (A$874m) in profits from Latin America and US$100m (A$109m) from African carriers. US and European carriers will see losses due to the slow rate of economic growth and higher unemployment, while the Middle East will also see losses due to weak yields on long haul services.

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