Airlines losses to go up to $11 billion in 2009
The International Air Transport Association (IATA) has said it expects airline losses to go up to $11 billion in 2009, higher by $2 billion from its previous estimate, due to low demand and higher-than-expected fuel prices.
 
"The bottom line of this crisis—with combined 2008-2009 losses at $27.8 billion—is larger than the impact of 9/11," said Giovanni Bisignani, director general and chief executive, IATA. 
 
Bisignani said the combined projected losses for this year and 2008 would be $27.8 billion — bigger than for 2001 and 2002. Losses for 2001-02 were $24.3 billion, as 9/11 triggered a precipitous drop in air travel.
 
IATA said industry revenues for the year are expected to fall 15% or by $80 billion to $455 billion compared with 2008 levels. The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot as rising costs and falling yields have squeezed airline cash flows, it added.
 
"The sharp decline in yields will leave a lasting mark on the industry’s structure and revenues are not likely to return to 2008 levels until 2012 at the earliest,” Bisignani said.
 
European carriers are expected to face highest losses at $3.8 billion in 2009, followed by Asia Pacific carriers at $3.6 billion.
 
“This is not an airline-only crisis. There is less cash coming into the industry and the entire value chain must be prepared for change. All our business partners—including airports, air navigation service providers and global distribution systems—must be prepared to cut costs and improve efficiencies. Some airports have delivered cost reductions, but not in line with the magnitude of the changes to the industry cash flow,” said Bisignani.
 
"Conserving cash, careful capacity management and cutting costs are the keys to survival. The global economic storm may be abating, but airlines have not yet found safe harbour. The crisis continues,” Bisignani added.
 
IATA said it expects losses to continue into 2010 with the industry expected to report a $3.8 billion net loss. This is based on a limited revival of growth in traffic volumes of 3.2% for passenger and 5% for cargo; very little increase in yields of 1.1% for passenger and 0.9% for cargo and oil at $72 per barrel.
 
IATA represents some 230 airlines comprising 93% of scheduled international air traffic. -Amritha Pillay news@moneylife.in
 

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India's Green Infra buys BP unit for undisclosed sum
Indian power producer Green Infra Ltd said it has bought BP Plc's unit BP Energy India Pvt Ltd for an undisclosed sum.
 
According to some media reports, Green Infra has paid Rs6.5 billion (about $134 million) for buying BP's Indian unit, which has a 100MW portfolio of wind energy assets. This also marks BP's exit from the renewable energy market in India.
 
Green Infra is a subsidiary of infrastructure-focused private equity investment manager IDFC Private Equity. Post the deal Green Infra will have a total generating capacity of 124MW.
 
"We have a very positive investment outlook on the power sector, particularly in renewables, and have committed Rs3.6 billion (about $72 million) to support Green Infra in consolidating its leadership position," said Satish Mandhana, managing director, IDFC PE. 
 
Following the acquisition, Green Infra will own operating assets worth over Rs7.5 billion ($150 million), including 20MW of assets eligible for the generation-based incentive announced by the Indian government and a development pipeline of over 300MW. 
 
IDFC PE recently closed its third fund with a corpus of $700 million and also has provided Rs3.6 billion to Green Infra. -Yogesh Sapkale news@moneylife.in

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Long wait for Toyota Fortuner
Those interested in roaming around in the newly launched Toyota Fortuner will have to wait for a few months more due to huge demand and the company's limited production capacity. Toyota Kirloskar Motor Pvt Ltd (TKM) has put 'on hold' all the new bookings for its newly launched 'Fortuner' following huge demand.
 
The company has asked its dealers to accept booking, without any advance payment while committing to a tentative date of delivery.
 
According to a company release, TKM had received a record 5,000 bookings for the Fortuner in just over a month. The company is trying to ramp up monthly production figures to 600 units per month from 500 units per month to meet high customer demand.
 
Last month, TKM, the joint venture between Japanese Toyota Motor Corp and India's Kirloskar group, launched Fortuner in India priced at Rs1.84 million. Originally launched in 2005, Fortuner has sold about 250,000 units in 60 countries.
TKM also said it is considering a price increase in its Corolla Altis and Innova due to rising input costs and fluctuation in currency rates.
 
At present, the company sells its Innova between Rs760,907 to Rs1.12 million while Corolla Altis is available from Rs965,000 to Rs1.31 million, ex-showroom Mumbai.
-Yogesh Sapkale news@moneylife.in
 

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