Airline losses likely to touch $11 billion

Global airline losses are headed for a worse-than-expected $11 billion this year and it’s not clear when lucrative business travel will rebound to pre-recession levels, a trade group said on Tuesday.

As recently as June, the International Air Transport Association had expected airlines to lose $9 billion this year. But airlines lost $6 billion in the first half alone. They’re still suffering from persistently high fuel prices, weak demand, and falling fares.

Airlines have struggled to fill seats - especially the profitable ones at the front of the plane, and last-minute business travelers who pay more. Demand for business and first-class seats has dropped 20 percent, compared with a 5 percent drop in coach.

The amount passengers will pay to travel is expected to fall 12 percent this year.

“When yields fall, they almost never recover,” said Giovanni Bisignani, IATA’s director general and CEO, speaking at a news conference in Washington.

Because of the recession, airlines are losing more money in 2008-2009 than they lost in 2001-2002 after the Sept. 11, 2001, attacks, Mr. Bisignani said. After that, it took more than three years for airline revenues to recover - and that was in a much smaller recession, he said.

“This could be a long-lasting structural change,” he said. “Even with better volumes we don’t see industry revenues returning to 2008 levels until 2012, 2013 at the earliest.”

IATA predicted a 2010 loss of $3.8 billion, and said it doesn’t expect the industry to turn a profit until 2011 at the earliest.

Mr. Bisignani said they are starting to see the beginnings of an economic recovery, especially in Asia. That’s helping to stem the declines in travelers and freight. But passengers are paying less to travel than they used to, and oil prices have risen. The air transport group said those factors are more than offsetting economic growth.