The International Air Transport Association (IATA) said recently it expected airlines to make a $4.7 billion loss in 2009, almost double the $2.5 billion loss it had originally forecast. Reflecting the rapid deterioration in global economic conditions, IATA said it expected industry revenue to fall by more than in the aftermath of 9/11, by some 12 percent, or $62 billion, to $467 billion. Between 2000 and 2002, industry revenue fell $23 billion. The association, which represents some 230 airlines, comprising about 93 percent of global scheduled air traffic, said demand was expected to fall sharply with passenger traffic expected to contract by 5.7 percent over the year. Cargo demand for was expected to decline by 13 percent. Both estimates are significantly worse than the December forecast of a 3 percent drop in passenger demand and a 5 percent fall in cargo demand. With airlines unable to take capacity out at a rate to match falling demand, yields for 2009 are expected to drop by 4.3 percent. Asia-Pacific carriers will continue be the hardest hit and post losses of $1.7 billion. In China, while carriers have been stimulating demand domestically, international demand was expected to contract between 5 percent and 10 percent. North American carriers are expected to deliver the best performance in 2009 after making capacity cuts early in the cycle and from not being tied into higher fuel hedging contracts. As a result, those carriers are expected to post a $100 million profit, despite facing a forecast 7.5 percent fall in demand. Middle Eastern carriers, despite the only region to face increased demand of 1.2 percent, will record a $900 million loss, slightly worst than the $800 million last year, due to carriers expanding capacity at faster rates than demand. In Europe, demand was expected to fall 6.5 percent. IATA didn't expect capacity cuts to be sufficient and expected carriers to post a combined $1 billion loss. Losses for African carriers are expected to widen to $600 million from $100 million last year as they lose market share to competitors on long-haul routes. Director General and Chief Executive Giovanni Bisignani said expected losses, combined with industry debt of about $170 billion, would put extreme pressure on the industry's balance sheet.
