World Airlines Still Face Turbulence

World airlines are set to lose $4 billion or more over the coming year, despite continuing growth in air travel, the top industry association said on Jan. 31. Air passenger traffic grew by 7.6% in 2005, driven largely by the Middle East and in Latin America, the International Air Transport Association (IATA) said in a statement.

"Freight and passenger traffic are forecast to grow in the 5%-6% range during 2006 but the industry is projected to record another loss of over $4 billion for 2006," said IATA Director General Giovanni Bisignani. "The industry will not see black ink until at least 2007," he warned.

Air freight grew by 3.2%, although there were signs of stronger growth in December. "The industry is returning to a more normal growth pattern after the shocks that began in 2001," said Bisignani. "Air freight, however is disappointingly low as a result of weaker demand from critical sectors such as IT and semi-conductors," he added.

Industry losses reached $6 billion in 2005, in keeping with predictions by IATA in December. That compared with $4.2 billion of losses in 2004 and $7.6 billion the year before.

A steady return to profitability in the airline industry has been hampered by a surge in prices of jet fuel to record high levels until they eased slightly in the final months of the year.

European and Asian carriers made total profits of $1.3 billion and $1.5 billion respectively in 2005, but those results were offset by financially troubled U.S. carriers, which lost $10.0 billion, IATA said.

Copyright Agence France-Presse, 2006

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