The International Air Transport Association today estimated the global airline industry lost $8 billion in 2008, with fourth-quarter losses comprising half of the full-year total. IATA in a statement today said the losses "were larger than expected, because of recession and fuel hedging losses."
IATA in its Financial Health Monitor released today noted its $4 billion figure for fourth-quarter losses could grow, as it only represents carriers that have released earnings, "with large losses now being reported by Asian and European airlines." The financials are worse than IATA initially predicted, as its December forecast projected a $5 billion full-year 2008 loss for the industry
(BTNonline, Dec. 9, 2008).
IATA noted, "Hedging losses were a large part of the larger-than-expected reported Q4 losses," as many carriers have bet on higher fuel prices, which, according to IATA, "appear to have formed a floor just above $40 a barrel."
IATA did not point to immediate signs of recovery for the industry, noting investors have downgraded airline stocks as a recessionary environment pervades the industry. "Equity markets fell further during February, with airline stocks particularly heavily hit in the U.S., where the Bloomberg airlines index was down 28 percent during the month and down 42 percent since the start of the year," IATA said, noting that stocks in Europe and Asia "were hit less."