IATA: International Airlines' Loss to Reach 6 Billion

The world's airline industry stands to lose 6 billion US dollars this year, the International Air Transport Association (IATA) said on Friday.

"Turning growth into profitability has never been more critical. Airlines will end 2005 with a 6 billion US dollars loss -- on top of 36 billion dollars in losses accumulated between 2001 and 2004," said Giovanni Bisignani, IATA's director general and CEO.

"As we battle the high price of fuel, cost efficiency will continue to be a top priority -- not only for airlines but for every partner in the value chain, including airports and air navigation service providers," he said in a statement.

Airlines have reduced non-fuel unit costs by 14 percent since 2001, according to IATA. As a result the break-even price of oil has risen from 22 dollars per barrel (Brent) in 2003 to 48 dollars per barrel (Brent) in 2005.

Based on continued cost reduction and an oil price of 53 dollars per barrel (down from 54.5 dollars in 2005) airlines are expected to return a loss of 4.3 billion dollars in 2006, according to IATA.

"We will only see profitability in 2007, when we expect a return of 6.2 billion dollars. This is a net profit margin of 1.5 percent, not even enough to cover the cost of capital and nowhere near recovering the billions lost since 2001. A long and difficult agenda for change involving all partners is still ahead of us," said Bisignani.

IATA brings together approximately 265 airlines, including the world's largest. Flights by these airlines comprise 94 percent of all international scheduled air traffic.

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