IATA cuts airline industry loss forecast

IATA cuts airline industry loss forecast    The International Air Transport Association this week cut in half its forecast for losses in 2010 but said the airline industry's recovery is still mostly benefiting Asian and South American carriers.
   'Helped by the strong year end we have cut our estimate of 2009 net losses from $11 billion to $9.4 billion,' IATA said in its monthly economic update. 'More significantly we now forecast smaller losses in 2010 of $2.8 billion, compared to our previous forecast of $5.6 billion, with the largest improvements benefiting airlines in Asia and Latin America.'
   IATA said tight supply situations in Asia have helped carriers carve out profits.
   'Tighter supply-demand conditions on some markets, particularly those originating in Asia, are pulling fares and cargo rates higher,' IATA said. 'Airlines in those regions are seeing the benefits. But both fares and cargo yields are still 10 to 20 percent lower than early 2008 levels. Moreover, it remains to be seen whether these conditions of relatively scarce capacity will persist. There are 1,400 jets and turboprops scheduled to be delivered this year, which, if no aircraft were taken out of service, would add 5 to 6 percent to the fleet. The other potential source of additional capacity is from the underutilized existing fleet.'
   Finally, IATA warned airlines to beware the impact of rising fuel prices as global economies recover.
   'Stronger economic growth is boosting revenues but it is also pulling oil prices up,' IATA said. 'In line with the futures curve we have raised our 2010 forecast for oil prices from $75 a barrel to $79. Airlines need to take out other costs now before labor and other markets tighten to the point where this becomes impossible.'