Mideast airlines predicted to lose $500m in 2009

The outlook for Middle East airlines is improving despite a deepening crisis affecting the global aviation sector which is likely to lead to losses of $11bn in 2009, it was announced on Wednesday.

The International Air Transport Association (IATA) has  revised its global financial forecast downwards but added that the region's carriers would see losses of $500m this year, from a previous estimate of $1.5 billion.

"Airlines continue to gain long-haul market share with expanded capacity and hub connectivity. The weakness of economic recovery, however, could mean continued excess capacity and further losses," the IATA said.

Its global forecase of $11 billion losses is $2 billion worse than previously projected due to rising fuel prices and exceptionally weak yields.

Industry revenues for the year are expected to fall by $80 billion (15 percent) to $455 billion compared with 2008 levels.

“The bottom line of this crisis — with combined 2008-9 losses at $27.8 billion — is larger than the impact of 9/11,” said Giovanni Bisignani, IATA’s director general and CEO. Industry losses for 2001-2002 were US$24.3 billion.

“This is not a short-term shock. $80 billion will disappear from the industry’s top line. That 15 percent of lost revenue will take years to recover. Conserving cash, careful capacity management and cutting costs are the keys to survival. The global economic storm may be abating, but airlines have not yet found safe harbor. The crisis continues,” added Bisignani.

IATA said passenger traffic is expected to decline by 4 percent and cargo by 14 percent for 2009 while yields are expected to fall 12 percent for passenger and 15 percent for cargo.

“The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot. Rising costs and falling yields have squeezed airline cash flows. The sharp decline in yields will leave a lasting mark on the industry’s structure. And revenues are not likely to return to 2008 levels until 2012 at the earliest,” said Bisignani.

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