Airlines will lose $9bn (£5.7bn) this year, nearly double previous forecasts, as carriers fight to stay afloat in the "most difficult" trading conditions they have ever faced, the industry's leading body has warned.
Buffeted by a collapse in business traffic, falling fares and the threat of resurgent fuel costs, the industry is expected to come close to matching last year's losses of $10.4bn, said the International Air TransportAssociation (Iata). Revenues are expected to fall by 15% this year, a decline of $80bn, as passenger numbers fall and airlines slash fares to entice a dwindling amount of potential customers. As a result, the forecast industry loss this year has nearly doubled from $4.7bn to $9bn.
Giovanni Bisignani, Iata chief executive, said the industry's future depended on a "drastic" reshaping by governments, through lower taxation and fewer ownership guidelines, and by mergers between airlines.
"There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced," said Bisignani.
The Iata boss is renowned within the industry for his apocalyptic outlooks, prompting a gentle rebuke from the chief operating officer of Airbus, John Leahy, who said the long-term outlook for aircraft manufacturers remained strong.
However, Bisignani's comments were backed by leading airline executives this morning at the Iata annual general meeting in Kuala Lumpur. Willie Walsh, British Airways chief executive, said "every" airline was in a fight for survival.
"Everyone is fighting for survival, if you look at their financial performances," said the BA boss, whose airline lost a record £401m last year. Asked if he agreed with the assessment of arch-rival and Virgin Atlantic co-owner Sir Richard Branson, who said two major carriers could go bust this year, Walsh joked that he was unlikely to reach an accord with the tycoon on anything. "If he said two I am going to disagree with him." He added: "It is quite possible that you could see a number of airlines fail, with oil prices rising and no sign of the economic environment improving. There are a lot of airlines that could fail."
Pointing to Ryanair's first full-year loss in 20 years, announced last week, Walsh said "all airlines" were encountering difficulties. Last year more than 30 airlines collapsed, including Silverjet and XL Airways in the UK, following a spike in fuel costs that saw the price of oil nearly breach $150 a barrel.
By
Aakriti Gupta MBA [HR]
H R Consultant
AeroSoft Corp
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