IATA deepens forecast for airline losses to $7.4 billion

IATA deepens forecast for airline losses to $7.4 billion    The International Air Transport Association (IATA) said Monday that “skyrocketing oil prices” has forced it to revise its forecast for losses in the aviation industry for 2005 to $7.4 billion.
      The revised forecast is based on an average oil price (over the 12 months of 2005) of $57 per barrel (Brent). In May, Geneva-based IATA issued a loss forecast of $6 billion based on an average price of oil at $47 per barrel.
   “Oil is once again robbing the industry of a return to profitability. Each dollar added to the price of a barrel of oil adds $1 billion in costs to the industry. Cost reduction and efficiency gains have never been more critical,” said Giovanni Bisignani, IATA’s director general and chief executive officer.
   IATA said that by the end of the year the air industry’s fuel bill will have more than doubled in two years, from $44 billion in 2003 to $97 billion in 2005. “With a total industry turnover in the range of $400 billion per year, a fuel bill of $97 billion makes up 25 percent of our total costs,” Bisignani said.
   IATA also highlighted that airline industry losses have been sharpest amongst North American carriers, who posted $32 billion of the $36 billion global industry loss between 2001 and 2004. For this year, IATA said losses by North American airlines could exceed $8 billion, while European airlines are expected to break even and Asia Pacific carriers are forecasting profits in the range of $1 billion.