Airline Industry Group Dims Outlook

The International Air Transport Association sees a $4.9 billion loss for airlines worldwide in 2009, but a slight profit for North American carriers.
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The outlook for global aviation this year is grim, but the U.S. airline industry is still expected to be slightly profitable, says the International Air Transport Association.

IATA downgraded its outlook Tuesday, saying the global industry will lose $4.7 billion this year, nearly twice its earlier projection. Industry revenue is expected to fall by 12% to $467 billion, compared with a 7% decline following the Sept. 11 terrorist attacks.

Nevertheless, IATA said carriers in North America "are expected to deliver the best performance for 2009" with a combined profit of about $100 million, as a 7.5% fall in demand is expected to be matched by a 7.5% cut in capacity. "Carriers are benefiting from careful capacity management and lower spot prices for fuel," IATA said, while carriers in other regions have not been as quick to reduce capacity.

The largest carrier,


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, expects to be profitable this year, President Ed Bastian told a transportation conference this month.

Overall, "the prospects for airlines are dependent on economic recovery," said Giovanni Bisignani, CEO of IATA, in a prepared statement. "There is little to indicate an early end to the downturn.

"Much of the deterioration forecast for 2009 had already happened by January," Bisignani said. "As manufacturers end their destocking there should be a modest bounce in air freight as component shipping rises a little. But weak consumer and business confidence is expected to keep spending and demand for air transport low."

IATA said Asia Pacific is the hardest hit region, with a 6.8% fall in demand but only a 4% decline in capacity. In India, for instance, capacity is expected to increase by 0.7%, while demand falls 2% to 3%.

In Europe, while demand is expected to fall by 6.5%, capacity cuts are expected to be about 5.3%. Meanwhile, the Middle East will have demand growth of 1.2%, but capacity is slated to rise 3.8%, resulting in a projected loss of $900 million for Middle East carriers.