May 2010 covers_Covers.qxd - World Airnews

IATA Halves 2010 Loss Forecast
THE INTERNATIONAL Air Transport Association (IATA) has
halved its loss forecast for 2010 to US$2,8-billion
compared to the US$5,6-billion loss originally forecast in
December 2009.
The improvement is largely driven by a much stronger recovery
in demand seen by year-end gains that continued into the
first months of 2010. Relatively flat capacity translated into some
yield improvement and stronger revenues.
IATA also lowered its 2009 loss estimate to US$9,4-billion from
the previously forecast US$11-billion loss.
Improvements are driven by economic recovery in the emerging
markets of Asia-Pacific and Latin America whose carriers
posted international passenger demand gains of 6,5% and 11%
respectively in January. North America and Europe are lagging
with international passenger demand gains of 2,1% and 3,1% respectively
for the same month.
Forecast highlights include an improving passenger demand
which fell by 2,9% in 2009, but which is expected to grow by 5,6%
in 2010. This is an improvement on the previous forecast in December
of 4,5% growth. As far as load factors are concerned, airlines
kept capacity relatively in line with demand throughout 2009.
A strong year-end recovery pushed load factors to record levels
when adjusted for seasonality. By January the international passenger
load factor was 75,9% while cargo utilisation was at 49,6%.
In terms of yields, tighter supply and demand conditions are
expected to see yields improve—2% for passenger and 3,1% for
cargo. This is a considerable improvement from the precipitous
14% fall experienced by both in 2009.
With improved economic conditions, the price of fuel is rising.
IATA raised its expected average oil price to US$79 per barrel from
the previously forecast $75. The combined impact of increased capacity
and a higher fuel price will add $19-billion to the industry
fuel bill bringing it to an expected $132-billion in 2010.
Revenues will rise to $522-billion in 2010, which is $44-billion
more than previously forecast and a $43-billion improvement
on 2009.
REGIONAL DIFFERENCES
Regional differences in airlines prospects are sharp. Asia-Pacific
carriers will see the US$2,7-billion 2009 loss turn to $900-million
in profits on the back of a rapid economic recovery being driven
by China.
Cargo markets are particularly strong with long-haul cargo capacity
for shipments originating in Asia experiencing a capacity
shortage. Demand is expected to grow by 12% in 2010.
Latin American carriers will post an $800-million profit for the
second consecutive year. The region’s economies are less debtburdened
than the US or Europe. Economic ties to Asia helped
isolate the region from the worst of the financial crisis.
European carriers will post a $2,2-billion loss — the largest
among the regions. North American carriers will post the second
largest losses at $1,8-billion.
Middle East carriers are expected to experience demand
growth of 15,2% in 2010, but will see losses of $400-million. Low
yields in long-haul markets connected over Middle East hubs is
a burden on profitability.
African carriers are likely to post a US$100-million loss for
2010, halving 2009 losses. Demand is expected to improve by
7,4%, but this will not be sufficient for profitability as they continue
to face strong competition for market share. Q
WORLD AIRNEWS, MAY 2010. 39
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