5 years after 9/11, airlines look up to recovery

Geneva, Dec 12: Airlines worldwide almost reached breakeven point at net post-tax level during 2006 following cumulative losses of 41 billion dollars since the 9/11 terror attacks.

A forecast for industry losses by the International Air Transport Industry (IATA) has now been revised down from 1.7 billion dollars to 0.5 billion dollars.

''If it were not for six billion dollars of restructuring costs at Delta and Northwest, the whole industry would have been in profit,'' said IATA's Director General Giovanni Bisignani.

This is quite an achievement since oil prices are expected to average 66 dollars a barrel, increasing the fuel bill by 23 per cent to 112 billion dollars this year, he told a select group of journalist at the global year-end press briefing.

''In 2007, assuming much reduced restructuring costs, we now expect the global airline industry to report net profits of 2.5 billion dollars,'' said Mr Bisignani.

IATA's Chief Economist Brain Pearce said 500 million more passengers will want to fly by 2010.

''That means a total of 2.5 billion passengers are expected to fly. The largest addition is within Asia particularly India and China, where economic and travel growth is strong,'' he added.

Even the more mature and slower growing European and US domestic markets will, by virtue of their size, see large numbers of extra passengers wanting to fly over the next four years, said Mr Pearce. But travel within Asia becomes the largest at a forecast of 678 million passengers in 2010 compared to 552 million in the US domestic market.

Airlines across the world suffered losses of 13 billion dollars in 2001 after the twin-tower terror strikes in the United States on September 11. The losses totaled 11.3 billion dollars in 2002, 7.6 billion dollars in 2003, 5.6 billion dollars in 2004, 3.2 billion dollars in 2005 and are expected to be 500 million dollars in 2006.

''Looking ahead, fuel prices may stabilise but slower economic growth will bring with it slower airline revenue growth, which will make further progress on profitability challenging without additional supplier cost and regulatory improvements,'' said Mr Pearce.

Driving further efficiencies and competitive pricing from our suppliers will become increasingly important in this slower growth environment, he said.

The International Air Transport Association (IATA) is a governing body that creates regulation for international air transport. It represents 265 airlines that carry 94 per cent of scheduled air traffic.

Globally, airlines represents a 400 billion dollar industry that generates 2.9 trillion dollars of economic activity.

UNI