Airlines To Stay In Red


Coming off a very volatile two years ravaged by world economic woes and steep fuel prices, the International Air Transport Association (IATA) is predicting more losses in 2010, in spite of predicted upticks in travel and a forecast that business jets may rebound for 2011. IATA recently bumped its projection of a $3.8 billion loss for 2010 by 47 percent. The organization now predicts a $5.6 billion loss. If true, that will fall back-to-back with the $11 billion loss forecast for 2009. That loss has hit business aviation, too. “General aviation … has taken an unnecessary pummeling,” former FAA head Marion Blakey told Reuters. Blakey stood by predictions that demand for business jets should pick up in 2011, a sentiment echoed by Pratt & Whitney President David Hess. “Utilization is up,” Hess said. But an increase in passenger traffic at the airlines and increased utilization in the business aviation world aren’t expected to beat out high fuel costs. “Airlines will remain firmly in the red in 2010,” IATA CEO Giovanni Bisignani said in a statement. As for the bizav world: While the fall may be over, “that’s not the same as a recovery,” the Teal Group’s Richard Aboulafia recently told Reuters.

Speakers earlier this month at the Reuters Aerospace and Defense Summit noted that American jet manufacturers have cut an estimated 19,000 jobs in their attempt to weather the downturn. Many analysts estimate that China may become one of the first major sparks for a recovery as that country sees a relative boom in wealth creation over the next decade.