Mideast airline losses may top $1.5 billion
Manama, June 9, 2009
Airlines in the Middle East are likely to see losses deepen to $1.5 billion this year despite strong traffic growth, according to the International Air Transport Association (Iata).
Iata also said that the region's intercontinental hubs are vulnerable to recessionary impacts in both European and Asian source markets.
In a gloomy report on the global airline industry, the IATA has revised its airline financial forecast for this year to a global loss of $9 billion.
This is nearly double the association's March estimate of a $4.7 billion loss, reflecting a rapidly deteriorating revenue environment.
IATA also revised its loss estimate for last year to $10.4 billion from the previous estimate of $8.5 billion.
'There is no modern precedent for today's economic meltdown,' IATA's director general and chief executive officer Giovanni Bisignani said in his State of the Industry address to 500 of the industry's top leaders gathered in Kuala Lumpur for the 65th Iata annual general meeting and World Air Transport Summit.
'The ground has shifted,' he said.
'Our industry has been shaken. This is the most difficult situation that the industry has faced.
After September 11, revenues fell by seven per cent. It took three years to recover lost ground, even on the back of a strong economy.
'This time we face a 15 per cent drop - a loss of revenues of $80 billion - in the middle of a global recession.
'Our future depends on a drastic reshaping by partners, governments and industry.
'We cannot bear the cost of government micro-regulation, crazy taxation and partners abusing their monopoly power,' he added.
'Recession is the most significant factor impacting the industry's bottom line. Iata's revised forecast sees revenues declining from $528 billion in 2008 to $448 billion this year.'
Air cargo demand is expected to decline by 17 per cent.
This year, airlines are forecast to carry 33.3 million tonnes of freight, compared to 40.1m tonnes last year.
Passenger demand is expected to contract by 8 per cent to 2.06 billion travellers compared to 2.24 billion last year.
The revenue impact of falling demand will be further exaggerated by large falls in yields - 11 per cent for cargo and 7 per cent for passenger.
Bisignani urged governments to avoid protectionist policies as they stimulate economies.
'The forces of de-globalisation are gathering strength,' he warned.
'World trade is already suffering with a 15 per cent downturn. Protectionism is the enemy of global prosperity.
'In the 1930s, it prolonged the recession. And it will not work today. To build a strong global economy, we must fight hard to keep the world trading,' Bisignani added. – TradeArabia News Service