$4.7 Billion Airline Loss In 2009, Topping Sept. 11 Figures: Report

GENEVA — World airlines will lose $4.7 billion this year due to the economic crisis, while revenues will drop by more than after the Sept. 11, 2001 terrorist attacks in the U.S., a major industry association predicted Tuesday.

The revised loss estimate, nearly double the previous forecast issued in December, reflects "the rapid deterioration of the global economic conditions," said the International Air Transport Association.

"The state of the airline industry today is grim," said IATA CEO Giovanni Bisignani. "Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago."

Revenues are expected to fall by $62 billion, or 12 percent, to $467 billion, the association said.

"Resizing the industry will be much tougher than the adjustments we saw after 9/11 or SARS," Bisignani said.

The 2001 attacks in the United States had a major impact on air travel. Industry revenues fell about 7 percent, or $23 billion, from 2000 to 2002. The 2003 outbreak of Severe Acute Respiratory Syndrome in Asia also led to a major decline in air travel, especially in the region.

"The pressure on the industry balance sheet is extreme," said Bisignani.

Running counter to the trend in the outlook is North America, where carriers are expected to deliver the best performance with a combined $100 million profit for the year, the association said.

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"A 7.5 percent fall in demand is expected to be matched by a 7.5 percent cut in capacity," IATA said. "Despite the worsening economic conditions, this is relatively unchanged from the earlier forecast of a $300 million profit." U.S. carriers will benefit from having cut unprofitable routes and avoided stockpiling fuel while prices were high.

Despite facing difficult times ahead, IATA chief Bisignani said the airline industry would not be asking for bailouts. Instead, he called on governments to stop increasing airline taxation, much of which he said was being used to fund the banking industry rather than the environmental projects it was supposedly earmarked for.

IATA, which represents 230 airlines worldwide, said passenger traffic is expected to drop by 5.7 percent over the year. Cargo demand will decline by 13 percent.

"Both are significantly worse than the December forecast of a 3.0 percent drop in passenger demand and a 5.0 percent fall in cargo demand," it said.

Bisignani said losses would have been even larger without the fall in fuel prices in recent months.

IATA also revised upward to $8.5 billion its forecast losses for last year. The previous estimate was $5 billion.

"The fourth quarter of 2008 was particularly difficult," with carriers reporting a very sharp fall in lucrative premium travel and cargo traffic, it said.

The Asia Pacific region is the hardest hit. It is expected to post losses of $1.7 billion, compared with the previous forecast loss of $1.1 billion.

Europe's carriers are expected to lose $1 billion in 2009, and Latin America is expected to see traffic plunge by 7.8 percent. African airlines are expected to lose $600 million, compared with 2008 losses of $100 million.

The Middle East will continue to see a 1.2 percent growth in demand, well off the double-digit increases of recent years.

IATA chief economist Brian Pearce told reporters in Geneva that plane deliveries from Boeing Co. and Airbus are expected to tail off to 700 a year by 2011 as airlines delay and cut back on orders. Last year, deliveries from the big two aircraft makers totaled 1,100.

IATA chief Bisignani also renewed his call for airline ownership rules to be relaxed, saying that consolidation was the only way forward for an industry that has long been starved of outside investment.

Comments

[JoeBlough]

More Bush Legacy Fallout.

[JoeBlough]

Time to fix up the railroads. Just don't let TSA work for them.

[SteveFilson]

Here's a little cause and effect and let's see if anyone agrees. Regulated airlines with set ticket prices equals 40 years of proftits. Un-regulated pricing for thirty years since 1978 equals an airline industry aggregate loss of 37 billion dollars with 5 billion losses to be added this year. See a relationship?
We need set, minimum prices, a moratorium on fare wars, and a stop to selling their product below their costs. Let 'em fly wherever they want, let them compete for gate spaces, and let them go back to competing on the basis of service rather that a costly fare war. When they're healthy again, let the prices free float and see if they can do better. How about a 5 year moratorium on all this pricing insanity.
Does anyone see the relationship?

[drymartini1]

so u want people to pay higher prices?

that is so republican !!

[MESGAIN26]

no bail out

[Bitsko]

Except for the sad fact that a lot of working folks will be out of their jobs, this is a boon for the health of our planet.

[EinChicago]

Who gives a damn. This tim elast year, I was a pretty firm supporter of the need to fight global warming, but the obsessive cult of fringies have changed that.

We need to fix the economy first and foremost before anything else.

[MajorKong]

Unless you think God's going to stick more oil in the ground we might just want to think about how much of the stuff we're using.

[Joethepauper]

What good is the economy if we are overpopulating and polluting the planet beyond sustainability? When we're fighting over resources to feed, clothe, house, and provide energy to billions of useless people, and the global climate is heating up, it's time to go back to making more money to satisfy your greed. I'm sure you think the fringes are wrong, but what if they are correct? What if what most climate scientists are saying about the Greenland ice sheet halting the ocean's convection currents is happening? Is it then time to make a mad dash for the money? After all, what do you care about what future generations will have to deal with as long as you make lots of money now? The money in the economy didn't just dissappear into a black hole. It's still there. It's now located in the fattest bank accounts in the history of mankind! How convenient?! If you thought the masters of the universe were powerful before, just wait. F___ the economy. I hope your house is near the coast.

[rf-hawaii]

At least they're burning less fuel for a while.

That's a good thing.

[EinChicago]

Ummm. No. It's an immaterial thing. we need to do something about teh idiotic obsessive fringies.

[Joethepauper]

Do you mean Climatologists? Are you a climatologist? Are you a meteorologist? What do you know about the Earth's climate? I'm not an economist, but I am certain the actual scientists who study natural phenomena are much more accurate than their economic equivalents. We have had 233 years of capitalism, and the economists FAILED to create a system that was sustainable. All those years of experimentation and they have yet to fix some of the problems that cause the markets to fluctuate so wildly. Kept down by religion for most of human history, the scientists are finally allowed to do serious work, and along come the capitalists trying to take the place of religious obstructionists. Capitalism was what caused most of the climate change, while it was running around the globe looking for resources to steal from indigenous populations for it's own gain. Here's an experiment you can do at home: Get a barrel of light, sweet crude, and place it in your living room. Set it on fire and see how long you can stand it in there. The world consumes (burns) approximately 75 million barrels of oil per day. All of that accumulates year after year and doesn't go away.

[fcsakes]

And again, thank you bushie for destroying my country. You are the most despised human on earth - well earned.

[DFL]

Bush and the republicans have left Barack with bigger problems than what Hoover left to FDR !

[LynnW49]

The Home page headline "Worse than 9/11" is misleading at best, sensationalist and exploitative at worst. Why do you do such things? If the article is about the airline business, don't make the Home page headline look like it is about another attack.

[smerkinb]

Thank you for expressing my sentiments more clearly. Alarmist headlines and shocking sound-bite quality snippits are a disservice to the readers and reflect poorly on the whole of HuffPost.

[Grommitt]

I agree. I'm fed up with your sensationalist, misleading headlines. Put the kiddies back into playschool, and put some mature adults in charge of editing.

[flyjet787]

I didn't read it that way at all. But perhaps it's because I work in the airline industry. The point was, losses right now are as devistating or worse than the losses to the industry following 9/11. I really don't think the headline is alarmist in any way. Just my $.02

[mortimus]

Agree

[Bitsko]

Exactly. I find it insulting.

[JoeBlough]

Gee, maybe if they made flying more enjoyable, more people would do it. Pull the plug on TSA. Let us take water on to the plane. Do I really have to take off my shoe?

[huffnpuffn]

Yes, yes you do, you wily terr0rist you.

TSA - keeping the skies safe from efficiency and human dignity since 9/12/2001.

[flyjet787]

Just one of many, many examples: When American Airlines removed seats from all of it's airplanes to substantially increase legroom passengers said they loved it. However, after a couple years of great marketing and huge losses in revenue, the seats had to be put back in. Why? Because 99% of fliers search for the cheapest fare, and don't select airlines based on product or service quality. American tried to make a profit by providing a better product at a small increase in price, and the public made it clear what was most important to them. They'll complain about lack of service, but next time they need to travel, they get on the internet and search for the lowest price. The market (that means you) spoke, and the airlines, if they want to stay in business, must be price competitive at the loss of good service.

[slowhand0728]

Get ready for the AIRLINE Bail-outs, American Airlines is too big to fail...Would cause a Crisis in the Travel Industry, doing nothing will cause....You get the idea. How much is this going to cost us?

[crayola 08]

the title is a little misleading. i thought they were talking about lives lost, not money.

[hypnotoad72]

Isn't money more important than people?

[JoeBlough]

A prime tenent of the Bush Legacy.

[andyboy]

Boy when our captains of industry and their little puppets Congress and the Senate screwed the pooch they really did a job.

Guess what America. They can't fix it. It's broken and busted and it just won't work anymore.

The bailouts have had ZERO effect. They will have ZERO effect. Oh except of course to insulate the millionaires at the top of the pyramid. And also they will leave us in debt up to our eyeballs for decades to come.

They lie to you with impunity while they empty the Treasury of every last dollar. Then they borrow more from the Commies.

Your government is totally out of control and careening into the ditch of bancruptcy and depression.

So long retirement. So long job. So long standard of living.

Will anyone be able to stop these bandits? These desperados?

[Palemoon]

Awesome post!

[JoeBlough]

Does this mean we can come home from Iraq?

[kittyarmy]

Who ever thought the commies would have all the money?

[Joethepauper]

After all, wasn't communism a failed economic model? We spent $13 Trillion fighting the Cold War all those years, and now we're borrowing Trillions from them to keep ourselves afloat. Maybe Capitalism was the failed economic model and they knew it all along, they just didn't want to believe it (sounds like Bushian logic to me). Russia is now thinking about putting bombers in Cuba and Venezuela, and China is poised to help them (they have already done joint military tests to see how well their troops operate together). At least with communism, we wouldn't be losing all the money in the economy to the richest people in human history without any way to get it back. I really don't care what "ism" we finally adopt as long as it is fair, just, and sustainable. At least with communism, everyone gets a free toaster and bicycle, which is more than I can say for capitalism (where you get to work hard for long hours for barely enough to get by).

[drymartini1]

A few thoughts.

1) Airline industry is one of the toughest sectors to make a profit EVEN when times are good. Thats just the nature of it (very low barriers to entry, i know its hard to imagine airline sector having low barriers to entry), commodity type behaviour (lowest cost wins, differentiation doesnt stand out much).

Warren buffett, famously quoted. "Someone would have done the investors all around the world a huge favor if he had shot the Wright Brothers before they took off". Airline travel maybe a huge advancement for society but for investors throughout history, its a downer.

airlines cumulatively have not returned positive profits in the past 100 years. Yes !! past 100 years !!

2) Lets not repeat the mistake we did during 9/11. Some airline companies need to be liquidated !!

NO BANKRUPTCY!! This is the opportunity. in these credit markets, no one would renegotiate the bankrupt airline's debt and would have to be liquidated.

What we need is no loan guarntees, no bailouts, no payments, no loans. NOTHING.

profitability can only return in this sector after at least 2-3 major airlines (at least 2) have been liquidated.

[BocaMom]

This sounds like another airline lobbying effort by Tom Daschle's wife, Linda Hall Daschle. She is a registered lobbyist for the Washington law firm that represents American Airlines, Boeing, Lockheed Martin,ect. Get ready for Nancy and Harry to give the airlines a bundle of money for their bailout, too.
Unfortunately, the old crony Congress have been replaced by the new crony Congress. Amazing.

[steamboat]

She's lobbied for Northwest Airlines, also.