IATA: Airlines Lost Record $10B in 2001

GENEVA – Major airlines worldwide, reeling since September 11, lost an estimated record $10 billion in 2001 with international passenger traffic dropping four percent, the International Air Transport Association (IATA) said on Tuesday.

A spokesman for the Geneva-based global airlines body, whose figures exclude domestic U.S. traffic, said that the suicide hijackings of four commercial airliners had accentuated an industry slowdown already underway in a weaker global economy.

Freight traffic dropped by eight percent in 2001, IATA said in a statement.

But IATA, which has 280 member airlines, said its recent corporate air tavel survey indicated that business travel could revive soon. This was despite international passenger traffic plunging by 12 percent in December -- normally a heavy month.

"It was the first year since the Gulf War that traffic on international scheduled services declined," IATA spokesman Tim Goodyear told Reuters.

It was only the second year since the end of World War Two that international passenger traffic contracted. Last year IATA members made a profit of $2.8 billion on international services amid a healthy rise in passenger traffic of more than six pct.

"We now estimate losses on those services at $10 billion last year. We hope that the recovery will be as fast as it was after the Gulf War, which took seven months," he added.

Prior to the September 11 attacks, IATA had estimated 2001 losses at $2.5 billion, a figure which tripled to $7.5 billion in the immediate aftermath.

The world's airlines suffered heavy losses in the period of 1990-94, beginning with a climb in oil prices after Iraq invaded Kuwait in August 1990. The worst year was after the 1991 Gulf War, with member airlines reporting combined losses of $7.5 billion in 1992, according to IATA.

The question of whether airlines can regain profitability in the second half of 2001 is open, but IATA put on a brave face.

"There are two hopeful signs. Capacity cuts in December were in line with the market conditions and we know from our corporate air travel survey that a pick-up in business travel may not be far away," declared Pierre Jeanniot, IATA director-general and a former head of Air Canada.

Goodyear said: "Unless the airlines cut capacity a whole lot more, it will be difficult to make money in times of negative traffic change. We are in unchartered water.

"Airlines are not very good at improving yields," he added.

U.S. carriers are estimated to have lost an additional $five billion on domestic traffic, according to the spokesman.

But IATA's corporate air travel survey gave cause for hope.

"A greater number of people (surveyed) were planning more business trips in the remainder of the year than those not planning trips," Goodyear said.