Airlines might lose $5.6 billion in 2010

Air transport group says high fuel costs and low profits will contribute to losses.

By TheStreet Staff Dec 15, 2009 12:01PM

TheStreetairline Travel © Digital Vision / Getty ImagesBy TheStreet Staff 

 

The International Air Transport Association expects airlines to lose $5.6 billion next year, increasing an earlier projection by 47%.

 

The IATA had originally projected $3.8 billion in losses for the industry in 2010. The group reiterated its forecast for $11 billion in losses this year.

 

IATA expects passenger traffic to return to its 2007 peak next year. Air cargo demand will also rebound as depleted inventories are restocked. However, the group expects high fuel costs and low passenger yields to contribute to mounting losses. Yields reflect the prices customers pay to travel a mile.

 

Bing: More on the International Air Transport Association

 

"The worst is likely behind us. For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%," said IATA CEO Giovanni Bisignani in a statement.  Still, "airlines will remain firmly in the red in 2010."

 

Next year, industry revenue is expected to rise 4.9% to $478 billion from 2009. While cargo yields are expected to improve by 0.9% in 2010, passenger yields aren't expected to improve from their low levels, IATA said.

 

An average oil price of $75 a barrel is expected in 2010, up considerably from the $61.80 average expected for 2009, IATA said.

 

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