Global airlines will collectively ratchet up losses of $11 billion this year, instead of the $9 billion previously predicted, as rising fuel prices and 'exceptionally weak' fares dent the bottom line, the International Air Transport Association said Tuesday.
Revenue for the industry will decline 15% to $455 billion this year as airlines continue to cut ticket prices, particularly in the premium part of the cabin, to try to stimulate demand.
"Yields have fallen dramatically. We have never seen anything like it in 64 years of tracking at IATA," said Chief Executive Giovanni Bisignani, reports MarketWatch.
The trade group says it's starting to see the beginnings of an economic recovery, especially in Asia. That's putting more travelers and freight back on airplanes. But passengers are paying less to travel than they used to, and oil prices have risen. The air transport group says those factors are more than offsetting economic growth.
The group estimates losses next year of $3.8 billion. It doesn't expect airline profits until 2011 at the earliest, The Associated Press reports.
"We are in intensive care," IATA Director General and CEO Giovanni Bisignani said during a conference call. "The crisis is not over."
Though conditions have improved since the recession began, airlines have been hurt because of heavy discounting to keep passengers on planes, Bisignani noted.
European carriers are expected to post the largest losses ($3.8 billion), followed by Asia-Pacific carriers ($3.6 billion). North American carriers are expected to lose $2.6 billion.
Passenger traffic is expected to decline by 4 percent and cargo by 14 percent this year.
The industry won’t bounce back until 2012, at the earliest, Bisignani said. It took the industry more than three years to recover after the Sept. 11 attacks, and the recession has been worse, he noted, informs Bizjournals.