Building a world of
resilient communities.

MAIN LIST

 

Airlines 'end 2004 $5bn in red'

The world's airline industry is set to rack up losses of almost $5bn (£2.6bn, 3.6bn euros) this year, global airline body IATA has forecast.

It also warned that the industry would only climb back into profit next year if oil prices fell.

If oil prices remain around the $40 a barrel level, industry losses will rise to $5.3bn in 2005, the IATA added.

The latest figures marked a sharp rise in loss forecasts from the $3bn loss the group forecast in the summer.

While yields - the amount of money made per seat on flights flown - had declined, the IATA blamed the projected loss squarely on rising fuel costs.

'Wiped out'

Director general Giovanni Bisignani described the soaring prices as "the fifth horseman of the Apocalypse for our industry".

Chief economist Brian Pearce added that, by the end of the month, fuel costs will have hit $62bn - up 23% on last year.

He added that huge cost-cutting measures carried out by companies this year had effectively been wiped out by rising oil costs.

The price of a barrel of oil needs to drop to $36 for airlines to break even, while a fall to $30 a barrel would see profits soar to $5bn, Mr Pearce said.

Airlines have weathered a turbulent few years with profits suffering from the Sars outbreak, Iraq war and terrorism fears in the wake of the 11 September 2001 attacks.

Yields down

More recently, the emergence of no-frills, low-cost airlines has been eating into profits at bigger names such as British Airways.

"The main culprit is the rise in fuel prices, but there has also been a decline in yields," Mr Pearce told journalists.

Yields have been dropping as traditional airlines offering full services have begun to slash prices in the face of mounting competition from low budget airlines.

However, Mr Bisignani did add that behind the "terrible figures" the basis of a profitable industry was emerging.

Passenger numbers had hit a record 1.8 billion, while air traffic is expected to grow by an average 6% a year to 2008.

IATA members account for 95% of companies operating international flights, a total of 270 major airlines.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

Tags:  

Resilience, impact, and learning

Resilience is about the capacity of a system to be able to respond to change.

Refusing the Call: A Tale Rewritten

I have been wondering for some time now how to talk about the weirdly …

Smart growth for conservatives

For conservatives, smart growth means recapturing good things from the past …

Dancing in the streets

It’s easy to be dismissive of all the articles on happiness these …

The State of the European Sharing Movement

The sharing movement in Europe is thriving.

A Case Study in Community Sustainability

Feldheim a perfect example of how a community working together can create …

Policies for Shareable Cities 2: Transportation

After last week’s introduction, we’re proud to present the first …