World’s airlines expected to lose $9B this year-WEB ONLY

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The world’s airlines will collectively lose
$9 billion this year – nearly double the previous projections – and face a slow
recovery as the economic crisis saps air travel and cargo demand, an industry
body warned today.

The International Air Transport Association,
which represents 230 airlines worldwide, increased its loss estimate from the
$4.7 billion it forecast in March, reflecting a “rapidly deteriorating
revenue environment.”

Although there has been growing signs of a
bottoming out of the recession, IATA said the industry was severely hit in the
first quarter with 50 major airlines reporting losses of more than $3 billion.
Weak consumer confidence, high business inventories and rising oil prices pose
headwinds for future recovery, the association said during a two-day global
aviation conference in Kuala Lumpur, Malaysia.

Revenues are expected to decline by $80
billion – an unprecedented 15 percent from a year ago – to $448 billion this
year, and the weakness will persist into 2010, it said.

“There is no modern precedent for
today’s economic meltdown. The ground has shifted. Our industry has been
shaken. This is the most difficult situation that the industry has faced,”
said IATA Chief Executive Giovanni Bisignani. The Geneva-based association also
revised its estimated loss for last year to $10.4 billion from $8.5 billion

It said passenger traffic for 2009 is
expected to contract by 8 percent from a year ago, to 2.06 billion travelers.
Cargo demand will decline by 17 percent and some 100,000 jobs worldwide are at
risk, it said.

The association expects the industry fuel
bill to shrink by $59 billion, or 36 percent, to $106 billion this year,
accounting for 23 percent of operating costs with an average oil price of $56 a
barrel. But crude oil prices have rallied in recent weeks, breaching the $70 a
barrel level on Friday on hopes of economic recovery.

Bisignani urged governments to avoid
protectionist policies and reiterated his call for more liberalization such as
the lifting of restrictions on routes and cooperation between airlines to
bolster the global airline industry.

IATA said carriers in all regions were
expected to report losses, with Asia-Pacific to be the hardest hit amid a sharp
slowdown in its three key markets – Japan, China
and India.
The region’s carriers are expected to post losses of $3.3 billion, worse than
the previous forecast of $1.7 billion but better than the $3.9 billion losses
last year.

North American carriers are expected to lose
$1 billion, far better than its $5.1 billion losses in 2008, thanks to early
capacity cuts and limited hedging by U.S. airlines.

Despite strong traffic, Middle East carriers
will see losses deepen to $1.5 billion as the region’s intercontinental hubs are
vulnerable to recessionary impacts in Europe and Asia.

A collapse for demand in premium services in
all major markets will see European airlines lose $1.8 billion. Latin American
carriers are expected to lose $900 million and African airlines $500 million.

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