"Airlines to lose big despite traffic gains"

Monday, September 27, 2004 

Airlines to lose big despite traffic gains
The Associated Press


MONTREAL (AP) -- Despite a jump of 19 percent in world air traffic so far
this year, airlines are expected to lose as much as $4 billion in 2004 due
to high fuel costs, the International Air Transport Association said Monday.


IATA director general Giovanni Bisignani said the association had predicted
a profit of $2.4 billion in 2004, the first annual profit since 2002, but
the sudden jump in the price of oil will spoil the gains. 

Airlines have collectively lost $24 billion since 2001, due to terrorism,
wars and international health scares. 

IATA, an industry association which has most of the world's airlines as its
members, said international passenger traffic for the first eight months of
2004 rose by 18.7 per cent and cargo by 14.2 per cent. In 2003, traffic was
down significantly due to the SARS health crisis. 

Bisignani acknowledged there is an overcapacity in aviation partly
responsible for the weak results. 

But he said government-owned airports and navigation services have not done
their part to reduce costs and share the burden of aviation's troubles. He
also called on governments to adopt more liberal policies to allow airline
competition and consolidation. 

Bisignani said barring crises, the best airlines have profit margins of four
to five percent and aerospace manufacturers have margins of 10 to 12
percent, while airports and air navigation services earn 20 to 30 percent
profit margins.


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