Airlines set to lose five billion dollars this year

Experts have painted a bleak picture for the airline industry for this year and next, predicting $5 billion in losses this year and $2.5 billion for 2009.

All global regions, with the exception of the US, are anticipated to report larger operating losses in 2009 than in 2008, according to projections by the International Air Transport Association (IATA).

In Europe, airlines are expected to see ten-fold increases in losses, reaching $1 billion, as the recession continues across the EU.

Fuel price hedging led to a locking-in of higher fuel prices for many carriers in Europe, and a weakened euro is magnifying the impact of hedging losses, the association reports.

Overall, revenues in the industry are expected to drop to $501 billion, which represents a decrease of $35 billion from the original forecast for 2008.

The fall in revenue is the first experienced since the decline seen in 2001 and 2002.

In 2009, passenger traffic is expected to drop by three per cent, after experiencing a two per cent level of growth in 2008. This would be the first decline since the 2.7 per cent seen in 2001.

Oil prices in 2009 are expected to average $60 per barrel, meaning a fuel bill of $142 billion for the industry, which is $32 billion lower than 2008, when the cost of oil averaged $100.

The director-general of IATA, Giovanni Bisignani, said: “The outlook is bleak. The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years.”

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www.iata.org