Airline executives say industry outlook still grim

Demand for air travel could decline further despite signs of a more stable global economy, and prospects of a recovery this year look slim, industry executives said at a meeting of the world's airlines on Sunday.

Cargo demand may have stabilised, but a pick-up is unlikely until demand recovers in the US, said the chief executive officer of Korean Air, the world's top air cargo carrier.

"I think we have hit the bottom," said Cho Yang Ho.

European aircraft manufacturer Airbus said it was sticking to its 2009 sales target of 300 gross orders but that it would be more difficult to accomplish. "It is more of a stretch now," Airbus commercial director John Leahy told Reuters.

"We see the market improving, and we have negotiations for orders ongoing."

International Lease Finance Corp, the world's largest plane-leasing company, said it was negotiating for more planes with Airbus and Boeing Co, but "at the right price".

The annual meeting of the International Air Transport Association began on a sombre note, with last week's still unexplained crash of an Airbus A330-200 adding to the woes of an industry hurt by the financial crisis and volatile oil prices. But several airline executives were quick to defend the plane.

"It's a safe plane, it's a good plane," said Chew Choon Seng, the chief executive officer of Singapore Airlines, which has 16 A330-200s on order. "We should not jump to conclusions."

All 228 people on board the Air France plane were killed when it crashed in the Atlantic Ocean, the world's worst air disaster since 2001.

Airline chiefs saw other concerns ahead, from rising unemployment to a surplus of plane capacity that could hurt profitability.

"I think it's probably going to get worse," remarked Rob Fyfe, chief executive officer of Air New Zealand,.

The bearish comments contrast with the more positive outlook from some global policymakers and economists about a global recovery in the wake of recent data such as the slowing pace of US job losses.

Airlines have cut capacity and jobs in response to a slide in profits, and some have delayed or cancelled orders for new aircraft from Boeing and Airbus.

The chairman and founder of India's Jet Airways said the airline may defer its orders for 10 Boeing 787 Dreamliners because of the economic crisis.

Deutsche Lufthansa's chief executive officer Wolfgang Mayrhuber said his airline, which has about €11.2 billion in orders for new aircraft, had no plans to delay or cancel any of them, although it was difficult to predict the outlook for the industry.