IATA Says Airline Losses will Be More than Predicted in 2010

It now seems that the IATA is saying that the airline industry’s losses for 2010 are going to reach $5.6 billion now. This is actually $1.8 billion higher than what was previously predicted. Despite this big increase in predicted losses, the adjustment is still only half of what the airline industry lost this year.

The director general and chief executive of IATA, Giovanni Bisagnani, described 2009 as a decade of massive airline losses totaling $49.1 billion. However, in a very rare show of optimism, he went on to say that 2010 is likely to be a big improvement on this year.

Giovanni Bisagnani said that airline numbers are finally starting to move in the right direction. Demand will likely continue to improve, and airlines are expected to drive down non-fuel unit costs by 1.3 percent. Some observers have already been hoping that September’s little upturn in passenger traffic of 0.3 percent marked the start of a recovery.

To this, Bisagnani said that the worst is more than likely behind the airline industry, as far as demand is concerned. However, yields continue to be a disaster and costs are rising. The airline industry remains firmly in the red with a fragile business environment.

European carriers will generate the biggest losses of any region next year at $2.5 billion. Although this is a big improvement over the $3.5 billion expected at the end of 2009, a combination of slow economic recovery, rising fuel costs and crowded airports is making it hard for airlines to trim capacity anymore. Passenger yields fell by 12 percent in 2009 compared to 2008 and are not expected to improve until next year.