MONTREAL, 18 Sept. 2009. Worldwide airline financial losses will total $11 billion this year -- $2 billion worse than originally predicted -- due to rising fuel prices and exceptionally weak yields, the International Air Transport Association (IATA) in Montreal announced this week.

Worse yet, IATA says worldwide airline losses in 2008 were $16.8 billion, not $10.4 billion, not $10.4 billion as the organization had previously reported. Industry revenues for the year are expected to fall by $80 billion, or 15 percent, to $455 billion compared with 2008 levels, IATA analysts predict.

Airline losses in 2008 and 2009 are "larger than the influence of 9/11," says Giovanni Bisignani, IATA's director general and chief executive officer. Industry losses for 2001-2002 were $24.3 billion.

"This is not a short-term shock," Bisignani says. "$80 billion will disappear from the industry's top line. That 15 percent of lost revenue will take years to recover. Conserving cash, careful capacity management, and cutting costs are the keys to survival."

IATA expects losses to continue into 2010 with the industry expected to report a $3.8 billion net loss. This is based on a limited revival of growth in traffic volumes of 3.2 percent for passenger and 5 percent for cargo; little increase in yields of 1.1 percent for passenger and 0.9 percent for cargo and oil at $72 per barrel.

Three factors are responsible for the expected losses: drops in demand, yield, and increases in fuel costs, according to IATA.

Passenger traffic is expected to decline by 4 percent and cargo by 14 percent in 2009, compared to declines of 8 percent and 17 percent respectively in the June forecast.

By July, cargo demand was down 11.3 percent and passenger demand was down 2.9 percent. While both are improvements over the lows of -23.2 percent for cargo (January) and -11.1 percent for passenger (March), both markets remain weak.

Yields are expected to fall 12 percent for passenger and 15 percent for cargo, compared to declines of 7 percent and 11 percent respectively in the June forecast.

Spot oil prices have been driven up sharply in anticipation of improved economic conditions. Oil is expected to average $61 per barrel (Brent) for the year (up from $56 per barrel in the June forecast). This will add $9 billion in cost for a total expected fuel bill of $115 billion.

North American carriers are expected to post losses of $2.6 billion, more than double the previously forecast loss of $1 billion. European carriers are expected to post the largest losses, $3.8 billion. This is also more than double the previously forecast $1.8 billion loss. Asia-Pacific carriers will post losses of $3.6 billion, similar to the $3.3 billion previously forecast.

Latin American carriers are expected to break even, an improvement from the previously forecast loss of $0.9 billion and the best performance among the regions. Middle East carriers will also see an improved outlook, from a loss of $1.5 billion to a loss of $0.5 billion. The outlook for Africa's carriers is unchanged with an expected loss of $0.5 billion.

For more information contact IATA online at www.iata.org.