MONTREAL - The airline industry says it will not turn a profit until at least 2011, comparing its current woes to the economic devastation caused by the 9-11 terrorist attacks.
The International Air Transport Association, a Montreal-based association of airlines, today painted a grim picture of an industry in crisis caused by low demand and higher-than-expected fuel prices.
CEO Giovanni Bisignani told a Washington news conference that expected losses in 2009 would be $US2 billion worse than previously forecast.
IATA predicts that the global airline industry will lose $11 billion in 2009, with an estimated loss of more than $6 billion in the first half alone, followed by projected losses in 2010 of $3.8 billion.
Bisignani said the combined projected losses for this year and last would be US$27.8 billion - larger than for 2001 and 2002. Industry losses for 2001-02 were US$24.3 billion, as the Sept. 11, 2001, terrorist attacks triggered a precipitous drop in air travel.
"Combining last year and this year losses are $27.8 billion and that is larger than the $24.3 billion lost in 2001-2002 after Sept. 11," Bisignani said.
"This industry is in a massive crisis. . . The global economic storm may be abating, but airlines have not yet found safe harbor."
The formula used by IATA includes the full 2001 and 2002 calendar years, meaning it excludes the impact of the terrorist attacks from eight months out of the 24-month sample.
The market meltown of 2008, which sparked the worst period of the current recession, also arrived late in the year. Bisignani said revenues for 2009 will be US$80 billion below last year's levels.
Passenger and cargo revenues are expected to fall in 2009, led by a 20 per cent drop in demand for business travel. Passenger traffic is also expected to decline by four per cent, and cargo by 24 per cent, for 2009.
IATA says the situation is being made worse by the rising cost of fuel. Spot oil prices have been driven up sharply in anticipation of improved economic conditions.
IATA doesn't expect airline profits until 2011 at the earliest.
"Revenues are not likely to return to 2008 levels until 2012 at the earliest," Bisignani added.
That claim is based on the sum of actual losses for all of 2008, plus projected losses for 2009, compared with what happened in 2001-02.
IATA warns of more airline bankruptcies in the coming months.
In an illustration of that danger, Japan Airlines Corp. announced drastic job cuts Tuesday as it faces severe financial difficulties.
The carrier said it would slash its work force by 14 per cent.