IATA Forecasts Huge losses for Airlines by the End of 2006

The International Air Transport Association made a revised forecast for 2006 industry losses. It is estimated that airlines will lose $1.7 billion, with a fuel bill of $115 billion calculated for an average oil price of US$68 per barrel (Brent).

This is a significant improvement on the previous loss forecast of $3.0 billion made in June that was based on an oil price of $66 per barrel for a total fuel bill of $112 billion.

However, stronger than anticipated economic growth has boosted airline revenues, and restructuring efforts have elevated load factors to record levels.

Airlines ended 2005 with a $3.2 billion loss including a fuel bill of $91 billion. "We are still in the red, but what other industry could add $24 billion to its second largest cost in a year and still improve the bottom line? Efficiency, hard work and a strong revenue environment have all contributed to this amazing result," said Giovanni Bisignani, IATA’s Director General and CEO.

The North American industry has recovered significantly and is expected to return to operating profitability this year, though overhauling costs will limit the reduction in net losses to $4.5 billion.