IATA projects US$5.2bn loss
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The International Air Transport Association (IATA) said a revised industry financial forecast that would see the global airline industry posting losses of US$5.2 billion this year.
The projection was based on an average crude oil price of US$113 per barrel (US$140 for jet fuel).
“The situation remains bleak. The toxic combination of high oil prices and falling demand continues to poison the industry’s profitability,” said Giovanni Bisignani, IATA’s Director General and Chief Executive Officer.
“While there has been some relief in the oil price in recent months, the year-to-date average is US$113 per barrel. That’s US$40 per barrel more than the US$73 per barrel average for 2007, pushing the industry fuel bill up by US$50 billion to an expected US$186 billion this year,” said Bisignani. IATA also announced industry traffic data for July which showed a continued slowdown in demand.
July year-on-year passenger demand growth fell to 1.9% – the lowest in five years while capacity increased by double that – 3.8% – indicating that service cuts are not keeping pace with the fall in demand.
The surprise of July was a 0.5% drop in passenger demand by Asia-Pacific carriers partly attributable to a change in Chinese visa requirements but also showing that economic weakness was spreading to previously robust economies.
Asia-Pacific carriers – the largest players in the cargo market – were hit hard with a 6.5% drop in demand.
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