Airline Industry May Report $6.1 Billion Loss on Fuel, Economy, IATA Says

[marmar]

from Bloomberg:



Airline Industry May Suffer $6.1 Billion Loss in 2008 (Update1)

By Andrea Rothman and Rishaad Salamat

June 2 (Bloomberg) -- Airlines may report combined losses of $6.1 billion this year, the worst since 2003, as spiraling fuel costs and slowing economies wipe out earnings.

The International Air Transport Association, whose members account for 93 percent of international traffic, cut its forecast for a fourth time in nine months at a meeting in Istanbul after oil prices rose 42 percent in six months. Airlines had a profit of $5.6 billion in 2007, the first since the 2001 terror attacks.

``Just as we start to recover we face another crisis of potentially even greater dimension,'' IATA Chief Executive Officer Giovanni Bisignani said at today's annual meeting. ``Skyrocketing oil prices are changing everything. The situation is desperate and potentially more destructive than our recent battles with all the horsemen of the apocalypse combined.''

More than a dozen carriers have collapsed in the past six months, with U.K.-based business-class operator Silverjet Plc the latest casualty, grounding planes last week after running out of cash. Long-haul budget carrier Oasis Hong Kong Airlines Ltd., Columbus, Ohio-based Skybus Airlines Inc. and Frontier Airlines Holdings Inc. of Denver also failed in recent weeks.

`Perfect Storm'

Bisignani said the surge in fuel expenses has combined with slowing demand after the tightening of global credit to create a ``perfect storm.'' The group forecast a $4.5 billion profit as recently as April 1.

IATA based its $6.1 billion loss estimate on an oil price of about $135 a barrel, equal to the record level reached on May 22. The 230-member group's official forecast is for a loss of $2.3 billion, based on a consensus oil price of $107.

``This really reflects the whole state of the industry,'' said John Strickland, director of aviation specialist JLS Consulting Ltd. in London. ``It shows the way in which the industry can rapidly turn from profit to loss. If you look at some of the other forecasts of oil at $200 a barrel then I think it's more likely to be worse than IATA's projections.'' ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aI8rglJk8HMw&refer=home

[madrchsod]

1. i noticed they did`t mention people giving up on flying

because of the problems in the just getting on the plane and actually arriving on time...

[eilen]

2. Maybe the airline tickets

should reflect what it costs without government subsidy. People should fly less often if they can't afford it. I know I'm driving less. Airlines should be in the position of offering a luxurious pleasant experience if they want people to purchase tickets. I won't fly because I resent being treated like a prisoner and like livestock. They can load the flying cattle cars with other sheeple.