Airlines: Inextricable Circumstances

Citing high oil prices and the slowing economy, the International Air Transport Association on Monday sharply lowered its industry forecast for 2008, saying it now expected a collective loss of at least $2.3 billion.

In March, the group forecast a profit of $4.5 billion. The industry reported a profit of $5.6 billion in 2007, the first since the Sept. 11, 2001, terrorist attacks in the United States.

At its annual meeting here, the association urged governments to roll back regulations that they argue are damaging the industry at a time when many carriers are in a situation it called desperate.

If the price of oil, now just below $130 a barrel, averages $107 over 2008, the industry will lose $2.3 billion for the year, the chief executive of the group, Giovanni Bisignani, said. Should it trade at $135 a barrel for the rest of the year, the industry will lose $6.1 billion, he added.

Twenty-four airlines went bankrupt in the last six months — three to four times as many as the group usually records in a year. With airlines paying about 90 percent more for fuel compared with a year ago, chief executives of major carriers attending the meeting said they were staring into the abyss.

Other problems facing the airlines, the group said, include uncertainty about the approaches by the European Union and governments toward state aid and airline mergers.

Issuing what he called an Istanbul Declaration for the industry, Mr. Bisignani urged airline workers to accept the notion that jobs would disappear if costs were not cut, and he urged governments to act to untangle regulations that he said were strangling opportunities for carriers to improve business.

He criticized the European Parliament for imposing 100 amendments to its emissions trading plans after the International Civil Aviation Organization had already agreed to ambitious environmental goals.
He said the industry faced a bill of 6.4 billion euros ($10 billion), “for a misguided and unilateral proposal that will inspire international legal battles but do very little for the environment.”

The European Commission on Monday defended its plans to regulate emissions from most aircraft that land or take off from airports in the European Union.