IATA: Global airlines in deep crisis, 26 go bust
Sunday, September 7, 2008 at 5:09 am Under Indian Stock Market 16 views
Painting a gloomy picture for the global aviation industry in 2008-09, the International Air Transport Association (IATA) forecast a collective industry loss of 5.2 billion US dollars in 2008, saying 26 carriers had gone bust so far.
The latest airline to file bankruptcy protection was the Italian national carrier Alitalia, which took the step last week, said IATA’s Director General Giovanni Bisignani. “The situation remains bleak. The toxic combination of high oil prices and falling demand continues to poison the industry’s profitability. We expect losses of 5.2 billion USD this year,” he told.
Maintaining that 26 carriers had folded up worldwide due to the acute financial crunch, the IATA Chief said “more airlines have gone bust in 2008 than in the aftermath of 9/11″ and a massive 1,80,000 jobs lost in the civil aviation sector. “It is a 500 billion dollar industry that suffers a debt of 190 billion. So the financial situation is much weaker than after 9/11,” said the Chief of IATA, which represents over 200 major airlines across the world.
Asked whether it was the right time for airlines to cut base fares and fuel surcharges now that the oil prices have come down, he said though there is some relief, “the year-to- date average is 113 USD per barrel. That is 40 dollars more than 73 dollars a barrel average in 2007.”
This has pushed the industry fuel bill up by 50 billion dollars to 186 billion USD this year,” he said, adding that fuel bill was expected to rise to 36 per cent of total operating cost of the industry compared with 13 per cent in 2002.
Analysing the region-wise break-up of losses, Bisignani said North American carriers were the worst-hit by the hike in oil prices. Airlines in this region, which had made a profit of 2.8 billion dollars last year, are expected to post losses worth 5 billion dollars in 2008 making them the hardest hit by this industry crisis, he said, adding “the United States is in the eye of a domestic economic storm.”
Almost similar was the situation of airlines in Europe with their profits tumbling “seven-fold from 2.1 billion USD in 2007 to 300 million in 2008.” Only the carriers in the Asia-Pacific would expect their profits to shrink from 900 million USD to 300 million this year, the IATA chief said.
While their counterparts in the Middle-East would see their profits drop by a 100 million to 200 million dollar, Latin American and African carriers would see losses deepen to 300 million and 700 million USD respectively. For 2009, Bisignani forecast that the “difficult business environment” would continue and the global aviation industry was estimated to suffer losses at 4.1 billion dollars. “The 2009 fuel bill is expected to rise, as hedging offers less protection, to 223 billion dollars comprising 40 per cent of the total operating cost,” he said.
(With inputs from PTI)
( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)
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