Airlines may lose $5.60 billion in 2010 despite demand revival: IATA

Freight volumes are up 3%, however, passenger yields are still 15% below peak levels and IATA expects losses for 2010 could be $5.60 billion

Airlines have started witnessing improvement in demand, but instead of profits they might register losses to the tune of $5.60 billion this year, the latest International Air Transport Association (IATA) report has said.

"The 3% increase in freight volumes from December to January is particularly encouraging. We can start to see the future with some cautious optimism. But better volumes do not necessarily mean better profits. Passenger yields are still 15% below peak levels and we expect 2010 losses to be at $5.60 billion," IATA director-general and chief executive Giovanni Bisignani said in a statement.

IATA has also said that demand for international scheduled air traffic has showed improvement in January this year. January passenger demand was up 6.4%, while a 1.2% increase in capacity pushed load factor to 75.9% compared to last year, it said.

International cargo demand showed a 28.3% improvement with a 3.7% increase in capacity, pushing load factor to 49.6%, which is a significant change from 40.1% recorded in January 2009.

The year-on-year increases reflect a steady improvement from the precipitous fall in demand that characterised the early part of 2009, rather than merely a dramatic improvement in the month this year, the report said.

However, demand must improve by a further 2% to return to the peak levels of early 2008, IATA said. But improvements are also geography-based, the report added.

The best signs of improvement have been seen in markets with strongest economic recovery like Asia, Latin America and the Middle East.

Asia-Pacific carriers experienced 6.5% increase in demand compared to the previous year. The region, which is leading the global economic recovery, has realised 31% demand improvement, while those in North America and Europe saw it increase by 2.1% and 3.1%, respectively.

Middle Eastern carriers grew throughout the recession with growth accelerating to 23.6% in January, IATA said.
 

  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    28 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)