The global airline industry is set to post losses of $5.2 billion this year and $4.1 billion in 2009 as high oil prices take a toll, the International Air Transport Association (IATA) said on Wednesday. "The difficult business environment is expected to continue," IATA Director-General Giovanni Bisignani told a conference call.
"The situation remains bleak." Geneva-based IATA, which represents 230 airlines world-wide, had estimated in June that losses would be between $2.3 billion and $6.1 billion in 2008, with the higher estimate based on oil ending the year at $135 per barrel. IATA's latest forecasts are based on an average crude oil price of $113 per barrel in 2008 and $110 per barrel in 2009.
As recently as April, IATA had anticipated an industry profit of $4.5 billion this year. In 2007 it posted profits of $5.6 billion. Soaring oil prices and economic downturn in the United States and other developed markets have pinched airlines hard.
To cope, many carriers have raised ticket prices, imposed fees and fuel surcharges and cut flight capacity, among other things, to reduce costs. Air France-KLM and Spain's Iberia airlines each reported big drops in earnings last month as a result of economic slowdown and costly fuel, and British Airways said the environment was the worst it had endured.
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