World airline losses climb but future brighter

The global airlines body IATA said the industry was heading for a near $5 billion deficit on international operations this year, pushing its total losses since 2001 to a massive $35 billion.

But the organisation's Director General Giovanni Bisignani said that, behind the "terrible figures," the basis of "a profitable industry" was emerging and that 2005 could bring a small profit if fuel prices stabilised.

"We are looking to losses of $4.8 to $5 billion for 2004," Chief Economist Brian Pearce of the 270-member International Air Transport Association, told a briefing for aviation reporters.

The figure marked a sharp rise in the loss forecast since mid-year when IATA predicted it would be $3 billion and even from the end of November when it was lifted to $4 billion.

"The main culprit is the rise in fuel prices, but there has also been a decline in yields," said IATA spokesman Anthony Concil, referring to the average revenue to carriers for every seat on flights flown. Yields have been dropping as traditional airlines around the world that offer full services have begun to slash prices in the face of mounting competition from budget companies, mainly in Europe but increasingly in other regions.

Mr Pearce said fuel this year would have cost the industry - from giants like Britain's BA Plc and the US Continental Airlines to small companies like Air Kazakstan and Royal Swazi - $62 billion by the end of the month, 25 per cent up on 2003.

Mr Bisignani described the hike in the fuel price - holding at $41 a barrel in London on Tuesday after averaging $21 a barrel in the decade from 1993-2003 and $25 in 2002 alone - as "the Fifth Horseman of the Apocalypse for our industry."

In the wake of the Asian Sars flu epidemic last year, the 2001 hijackings by Islamic militants in the United States, the global economic turndown from the turn of the century, and the two Gulf wars, it could have destroyed many airlines, he said.