Middle East carriers to lose $400m this year

11 March 2010

The International Air Transport Association halves loss forecast for 2010

Carriers in the Middle East will see losses of $400m in 2010 due to low yields in long-haul markets connected over Middle East hubs, which has impacted profitability.

“Low yields in the hubs are standing in the way of profitability,” says Giovanni Bisignani, director general and chief executive of the International Air Transport Association (IATA).

Carriers in the region will see a 15.2 per cent increase in passenger demand in 2010, according to IATA.

Middle East airlines saw a 23.6 per cent year-on-year growth in passenger traffic in January, the largest growth worldwide.

IATA has halved its loss forecast for airlines globally for 2010 to $2.8bn compared to the $5.6bn it forecast in December 2009.

The improvement is attributed by a much stronger recovery in demand at the end of last year that has continued into the first quarter of 2010.

Asia-Pacific carriers are leading the growth and will see the 2009 loss of $2.7bn reduce significantly to a profit of $900 million in 2010 because of strong economic recovery driven by China. Passenger traffic increased by 6.5 per cent in January in Asia-Pacific.

North American and European carriers will post the largest losses worldwide with $1.8bn and $2.2bn respectively in 2010.

African carriers are likely to post a $100m loss for 2010, halving losses seen in 2009, while carriers in Latin America will see profits of $800m for the second consecutive year.

IATA also reduced its 2009 loss estimate to $9.4bn from the expected $11bn. Global revenues this year will rise to $522bn – $43bn above the low seen in 2009.

“We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery. The weakest international markets are North Atlantic and intra-Europe which have continuously contracted since mid-2008,” says Bisignani.

Airlines have lost two to three years of in terms of growth due to the global economic downturn. IATA says 34 airlines are still suspended since 2008.

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