Airline losses will nosedive even further this year, according to IATA, which is forecasting industry post losses of $5.2 billion in 2008 based on an average crude oil price of $113 per barrel (US$140 for jet fuel). This is more than double the loss it predicted as recently as its annual meeting in early June.
“The situation remains bleak,” said Giovanni Bisignani, IATA’s director general. “The toxic combination of high oil prices and falling demand continues to poison the industry’s profitability.
“While there has been some relief in the oil price in recent months, the year-to-date average is $113 per barrel. That’s $40 per barrel more than the $73 per barrel average for 2007, pushing the industry fuel bill up by $50 billion to an expected $186 billion this year,” said Bisignani. Fuel is expected to rise to 36% of operating costs, up from 13% in 2002.
“While some regions will show small profits, the negative impact of the industry crisis is universal,” said Bisignani. North American carriers are expected to be the worst performers, and are forecast to post losses of $5.0 billion in 2008.
As a whole, carriers in the Asia-Pacific, Europe and Middle East regions will remain profitable, although African and Latin American carriers will post losses.
IATA also announced its initial outlook for 2009. Most economies are expected to deliver even weaker economic growth next year, which will negatively impact air travel and freight. With an expected oil price of $110 per barrel ($136 for jet fuel) and continued weak growth, industry losses are expected to continue at $4.1 billion.