The International Air Transport Association today said airlines are operating in the worst revenue environment in 50 years and projected global industrywide losses to hit $2.5 billion in 2009—on top of a projected $5 billion loss for 2008.
In a departure from previous forecasts, the one positive note in IATA's outlook is a brightening environment for carriers in the United States—largely on the heels of lower prices of fuel, which the association expects to average $60 per barrel next year. North American airlines are expected to net $32 billion in fuel savings compared with 2008, when oil is expected to average $100 per barrel.
IATA echoed a cautiously positive outlook shared by U.S. airline executives last week at the Credit Suisse Global Airline Conference in New York
(BTNonline, Dec. 8), noting domestic carriers have slashed capacity to meet severe demand reductions and their limited hedging activity makes them the beneficiary of significantly reduced spot prices in jet fuel. IATA expects domestic losses of $3.9 billion in 2008, but a modest profit in 2009. "North America will be the only region in the black, but the expected $300 million profit is less than 1 percent of their revenue. 2009 will be another tough year for everyone," said Giovanni Bisignani, IATA director general and CEO in a statement.
IATA said all other regions are moving into the red next year. The association expects Asia/Pacific carriers to double 2009 losses to $1.1 billion; European carriers to post "ten-fold" increases in losses of $1 billion next year; Middle Eastern carriers to double losses to $200 million; and Latin American carriers also to witness losses of $200 million, twice those projected in 2008.
IATA is projecting overall industry revenues to decline by $35 billion next year, noting that drop "is the first since the two consecutive years of decline in 2001 and 2002."
"The outlook is bleak," Bisignani said. "The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years."