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''The situation remains bleak,'' says international air carrier organization head

GENEVA, Switzerland – 09/09/08 – The global airline industry is expected to see losses of more than $5 billion this year due to high oil prices and falling demand, according to the head of the International Air Transport Association (IATA).

"The situation remains bleak,” said IATA Director General and CEO Giovanni Bisignani, who added that “the toxic combination of high oil prices and falling demand continues to poison the industry's profitability.”

The forecast is based on an average crude oil price of $113 per barrel, or $140 for jet fuel.

"While there has been some relief in the oil price in recent months, the year-to-date average is $113 per barrel. That's $40 per barrel more than the $73 per barrel average for 2007," said Bisignani.

The aviation industry group also said that the statistics for the latest (July) traffic data showed a continued slowing of demand.

July year-on-year passenger demand growth fell to 1.9% - the lowest in five years.

Cargo demand in July contracted by 1.9% compared to 2007. Asia-Pacific carriers – the largest players in the air cargo market – were hit hard with a 6.5% drop in demand.

"While some regions will show small profits, the negative impact of the industry crisis is universal," said Bisignani.

According to figures recently published IATA figures, North American carriers are expected to post losses of $5 billion this year making them the hardest hit by the industry-wide crisis, while carriers based in the Asia-Pacific region are expected to see profits shrink from $900 million in 2007 to $300 million this year.

European profits are expected to spiral downward seven-fold from $2.1 billion last year to only $300 million in 2008.

The “difficult business environment,” said Bisignani, “is expected to continue through next year. Most economies are expected to deliver even weaker economic growth next year, which will negatively impact air travel and freight.”

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