The International Air Transport Association or IATA on Thursday said it halved its fiscal 2010 loss forecast to US$2.8 billion, with the largest improvements benefiting airlines in Asia and Latin America.
Earlier in December 2009, IATA had expected a loss of US$5.6 billion. Further, IATA noted that relatively flat capacity translated into some yield improvement and stronger revenues. IATA also reduced its 2009 loss estimate to US$9.4 billion from the previously communicated outlook of US$11 billion loss.
The firm noted that the improvements are led 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, while North America and Europe are lagging with international passenger demand gains of 2.1% and 3.1% respectively.
Giovanni Bisignani, Director General and CEO of IATA, said, "We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery. The weakest international markets are North Atlantic and intra-Europe which have continuously contracted since mid-2008."
Passenger demand is expected to grow by 5.6% in 2010, versus a 2.9% downturn in 2009. Earlier in December, passenger demand is estimated to rise by 4.5%. Cargo demand, which fell by 11.1% in 2009, is projected to increase by 12% in 2010, significantly better than the prior outlook of 7.0% growth.
International passenger load factor by January was 75.9% and cargo utilization was at 49.6%, as strong year-end recovery boosted load factors to record levels when adjusted for seasonality.
Further, IAIA expects tighter supply and demand conditions to see yields improve, with 2% for passenger and 3.1% for cargo, a considerable improvement from the precipitous 14% downtrend experienced by both in 2009.
In light of the improved economic conditions with rising fuel prices, IATA hiked its estimated average oil price to US$79 per barrel from the previously issued forecast of US$75 per barrel, up US$17 per barrel on the US$62 average price for 2009. The combined impact of increased capacity and a higher fuel price would add US$19 billion to the industry fuel bill bringing it to an expected US$132 billion in 2010, IATA added.
Revenues are projected to be US$522 billion, an increase of US$44 billion compared to the previous outlook and a US$43 billion improvement on 2009.
Region-wise, Asia-Pacific carriers are expected to earn US$900 million, versus a loss of US$2.7 billion incurred in 2009, thanks to the rapid economic recovery being driven by China. Demand is expected to grow by 12% in 2010.
Latin American carriers are projected to post a profit of US$800 million, as economic ties to Asia helped isolate the region from the worst of the financial crisis. Demand is expected to grow by 12.2% in 2010.
European carriers is expected to incur a US$2.2 billion loss, reflecting the slow pace of economic recovery and faltering consumer confidence. However, demand is expected to grow by 4.2% in 2010, and Intra-European premium travel is expected to recover more slowly.
IATA expects North American carriers, which remains in the red, to report the second largest losses at US$1.8 billion, as the jobless economic recovery continues to burden consumer confidence. Demand is expected to improve by 6.2% in 2010. But with intra-North America premium travel still down 13.3% as of December.
Middle East carriers are expected to witness a 15.2% rise in demand for 2010, but would incur a loss of US$400 million, hurt by low yields in long-haul markets connected over Middle East hubs. In addition, African carriers are likely to post a US$100 million loss for 2010, halving 2009 losses. Demand is expected to improve by 7.4%.
Bisignani said, "The stark contrast between profitability among Asian and Latin American carriers while losses continue to plague the rest of the industry clearly demonstrates the fact that airlines have not been able to develop into global businesses. The restrictions of the bilateral system prevent the kind of cross border consolidation that we have seen in industries such as pharmaceuticals or telecoms."
He added, "Airlines are battling the challenges of the financial crisis without the benefit of this important tool. It's time for change."
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.