Global Airline Industry Nearly Doubles Loss Estimate to $9 Billion

HONG KONG — The global airline industry on Monday nearly doubled its forecast for losses this year to $9 billion, amid what it said were the worst conditions it has ever faced.

The International Air Transport Association said it now expected revenues across the industry to fall 15 percent to $448 billion this year — a much steeper decline than the one seen after the Sept. 11, 2001, terrorist attacks — and its new loss forecast was nearly twice the $4.7 billion it had projected in March.

“There is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaken,” said Giovanni Bisignani, the association’s director general, in a speech delivered at the association’s annual meeting in the Malaysian capital, Kuala Lumpur. “Our future depends on a drastic reshaping by partners, governments and industry.”

Mr. Bisignani’s comments highlighted the urgency felt by many carriers around the world as passenger numbers and freight traffic, a key line of business for many airlines, have been hammered by the global economic downturn.

First- and business-class tickets, in particular, have slumped as passengers switched to economy class, depriving many carriers of a major source of revenue that is unlikely to return to pre-crisis levels any time soon.

“Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world,” Mr. Bisignani said.

Airlines around the world have raced to adjust to the drop-off in global traffic by delaying planned investments, idling planes and cutting back flights. Many nonetheless face deep losses this year as the global downturn drags on.

Japan Airlines, the biggest Asian carrier by revenues, said it planned to cut capacity on international routes by 10 percent, and state-owned Air India said it was considering delaying planes on order from Boeing, Reuters reported Monday.

After the Sept. 11 attacks, revenues fell by 7 percent, Mr. Bisignani said. “It took three years to recover lost ground, even on the back of a strong economy. This time we face a 15 percent drop — a loss of revenues of $80 billion — in the middle of a global recession.”

I.A.T.A., which represents 230 carriers, said it expected air cargo demand to fall 17 percent this year and passenger demand to contract 8 percent to 2.06 billion travelers, compared to 2.24 billion in 2008.

Carriers in the Asia-Pacific region are expected to post the largest losses – about $3.3 billion – as Japan remains mired in recession and the once-booming economies of China and India cool off.

North American airlines are forecast to lose a total of $1 billion this year, but this is a significant improvement over the $5.1 billion that North American airlines lost in 2008, when soaring fuel prices hit many carriers there especially hard. Early cuts in flights in the region are also helping, I.A.T.A. said.

European carriers are expected to see losses totaling $1.8 billion.

The global industry’s projected losses this year represent a slight improvement over the $10.4 billion the industry lost in 2008, when fuel bills rose to a total of $165 billion as oil prices soared. This year, I.A.T.A. expects airlines’ fuel bills to fall back to $106 billion, but Mr. Bisignani warned of a risk that oil prices could be pushed up again as the global economy begins to recover.

Oil prices have crept up again in recent weeks amid signs that the global downturn has at least bottomed out.

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