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Stronger Demand Recovery

IATA adjusts projected airlines loss for this year by half

Mar 16, 2010

The Air Transport Association (IATA) is favorably downgrading its initial projection of US$5.6 million in airline losses for 2010 to exactly half of that at $US2.8 million. IATA said the improvement was largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010. It was also due to relatively flat capacity, which translated into some yield improvement and stronger revenues. The loss estimate for 2009 was also lowered to US$9.4 billion from the previously forecast US$11.0 billion loss.

IATA director general and chief executive Giovanni Bisignani said: "Revenues are half-way to recovery. Important fundamentals are moving in the right direction. Demand is improving. The industry has been wise in managing capacity. Prices are beginning to align with the costs—premium travel aside. We can be optimistic but with due caution. Important risks remain. Oil is a wild-card, over-capacity is still a danger, and costs must be kept under control—throughout the value chain and with labor."

Improvements were seen in the Asia-Pacific and Latin America in January where carriers from those markets posted international passenger demand gains of 6.5 percent and 11.0 percent respectively. However, North America and Europe continue to lag behind.

"We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery," Bisignani continued. "The weakest international markets are North Atlantic and intra-Europe, which have continuously contracted since mid-2008."

IATA adjusts projected airlines loss for this year by half
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