IATA predicts losses higher than previous estimate

IATA has released a recent statement reporting that in the coming year, the losses faced by the airline industry are going be as high as 5.6 billion dollars. This is around 1.8 billion dollars more than the previous estimate. However, most of the industry is not worried as even though the losses predicted seem huge, they account for only half of the losses witnessed this year.

Giovanni Bisagnani , the Director General and chief executive of IATA, announced that 2009 showed massive losses of over 49.1 billion dollars. In spite of all this however, 2010 is predicted to be relatively more profitable. The airline numbers are reportedly moving in the right direction and demand for air travel is expected to increase greatly in the coming years. Fuel costs borne by airlines will decrease by 1.3 percent and recovery is expected to follow.

Also, most airlines are optimistic that the worst period of declining demand of air travel has ended and now a recovery is expected. However the airline industry is still fraught with concerns as yields are still at an all time low and costs of operating aircrafts are increasing by the day.

The biggest losses that will be reported in 2010 will be reportedly be generated by European carriers. The figure is quoted to be as high as 2.5 billion dollars. But this is still a better number as compared to this year’s figure- 3.5 billion dollars. Airlines will not be able to trim capacity anymore even though a combination of slow economic recovery, crowded airports and rising fuel costs will be witnessed by airline companies. Passengers yields are expected to remain low until 2010.