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Airline industry suffers amid severe losses

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by Kay Mitchell

The International Air Transport Association (Iata) said major airlines continue to suffer amid higher fuel prices.

According to the industry group, in the first six months of the year, airlines are likely to have lost £3.7 billion.

Furthermore, the body said airlines made losses between April and June – the spring season when they would traditionally make 50% of their yearly profits.

Many airlines continue to experience a slump in demand with many forced out of business last year. British Airways recently admitted it was fighting for its survival and went to extreme measures in order to cut costs – by asking staff to work for free or take a pay cut.

The news comes as budget airline SkyEurope has filed for bankruptcy. All flights at the Slovakia-based airline have been suspended with immediate.

The loss-making airline, which operated out of Luton and Manchester, was established in 2001 and has been struggling to restructure its debt and cope with plunging revenues.

According to Iata, the industry has been severely hit by the global recession and, in particular, business class and leisure customers have cut back on travel, as well as companies transporting far less cargo.

In addition, the body said higher oil prices have made fuel more expensive, “intensifying airline cash burn.”

However, on a positive note, passenger and freight volumes are starting to pick up after both rose more than 3% in July compared with June. However, both are well below levels seen a year ago, said Iata.

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News posted: September 1, 2009

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