World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said today.
The International Air Transport Association had estimated in December the industry would lose $2.5 billion in 2009.
"The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago," said director-general Giovanni Bisignani. "The relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care."
IATA, which represents 230 airlines also raised its estimate of international airline losses in 2008 to $8.5 billion, from its previous $8 billion estimate.
Asia-Pacific carriers will continue to be hardest hit by global economic turmoil and are expected to post losses of $1.7 billion, against the earlier forecast loss of $1.1 billion in 2009, according to the Geneva-based body.
Carriers in North America are expected to deliver the "best performance" of IATA's six global regions in 2009 with an estimated $100 million profit, it said.
While economy travel demand has also slumped in response to the global financial crisis, airlines are most threatened by a decline in the premium segment which supports their bottom line.
IATA said last week that airline revenues from executive class tickets were down by a quarter in January from the same month in 2008, and said increasing numbers of business passengers were buying cheaper economy tickets.
Airlines around the world have slashed fares to encourage continued travel and unveiled a range of cost-cutting measures to stay afloat throughout an economic slump.
Singapore Airlines, the world's biggest airline by market value, last week asked staff to take unpaid leave for up to two years in a bid to reduce costs.
The Singapore carrier, which last month announced plans to cut its capacity by 11 per cent and has grounded 17 of its 100-plus aircraft, had already asked pilots at its cargo arm to volunteer for unpaid leave.
Cathay Pacific, the dominant airline of Hong Kong, and Asia's fifth-largest carrier by market value, which reported a record $1 billion second-half loss recently, said last week it could sell some assets to raise cash.
Emirates said last week it would stop using Airbus A380 double-decker aircraft to fly passengers between Dubai and New York because demand for the route had fallen because of the global recession.
International passenger demand fell 5.6 per cent in January compared to the same month a year ago, and cargo volumes fell 23.2 per cent year-on-year, the eighth consecutive month of contraction for cross-border freight.
IATA's February traffic figures are due to be released later this week. The data excludes domestic flights.
Reuters