The world's airlines are being squeezed even as the global economy recovers, with higher oil and jet fuel prices causing added pain, an industry group said on Tuesday. Net losses continued to expand in the second quarter of 2009, reaching at least $6 billion for the first half of the year, the International Air Transport Association (IATA) said. In its latest financial monitor, it said the second quarter of 2009 involved “further deterioration” for airlines' bottom lines. Big carriers normally take in half their annual profits in the season that includes the northern hemisphere summer. “This year Q2 losses of $2 billion follow Q1 losses of $4 billion,” IATA said in a statement. “Total industry losses in the first half of 2009 are likely to have been in excess of the reported $6 billion. IATA has previously estimated airlines will lose $9 billion in 2009 after an $8.5 billion loss in 2008, when high oil prices hit profits and then the global credit and financial crisis slashed demand for business and leisure air travel. The Geneva-based group, whose 230 member airlines fly some 93 percent of international air traffic, also said that signs of economic rebound had pushed up energy prices in August, with jet fuel prices above $80 a barrel. While air cargo volumes and passenger numbers rose in July, improving from their credit crunch and recession lows, IATA said “both remain well below levels seen at the same time last year.” “There was a material improvement in July but the future path is likely to be volatile and weaker than normal recoveries,” it said. IATA, whose members including British Airways, Cathay Pacific, Emirates and United Airlines, said last week that declines in cargo and passenger traffic in July were less than in the previous month. The industry's recovery was under way but will be “volatile and weak”, it said. Global airlines are likely to lose $9 billion this year, the International Air Transport Association said earlier, nearly double its estimate of just three months ago, as rising fuel prices and weak demand create an unprecedented crisis for the industry. “This is the most difficult situation the industry has faced,” Giovanni Bisignani, IATA's director general and CEO, told the aviation body's annual meeting in the Malaysian capital. IATA had predicted in March that 2009 losses for the airline industry would total $4.7 billion. It has also revised its estimate of 2008 losses to $10.4 billion from $8.5 billion. In an effort to ride out the crisis, made worse by the recent outbreak of the H1N1 flu virus, airlines have been looking to cut costs everywhere they can. Japan Airlines Corp, Asia's biggest carrier by revenues, said it planned to cut capacity on international routes by 10 percent in the 2010 fiscal year. Cathay Pacific, Hong Kong's largest carrier, said it was looking to further delay deliveries of new planes as it had seen no signs of recovery in its business. Globally, about 4,000 aircraft are scheduled for delivery in the next three years, which is 17 percent of the current fleet, IATA's Bisignani said. “Once again, aircraft ordered in good times are being delivered in recession. Finding customers to fill them will be a challenge,” he said. Another major problem was rising fuel costs, a problem it would be “irresponsible” of governments not to act on, Bisignani said. “The risk that we have seen in recent weeks is that even the slightest glimmer of economic hope sends oil prices higher,” he said.
