Airlines' Losses Get Worse In Q2, Says IATA

KUALA LUMPUR, Oct 1 - Losses for the airlines industry as a whole got worse in the second quarter, with 68 major airlines reporting net losses of US$2.3 billion following US$4 billion in the first quarter, the International Air Transport Association (IATA) said.

" The European Union and Asian airlines had the worst first half, accounting for around US$5 billion of industry losses; US losses were moderated by much larger capacity cuts," it said in its Airline Financial Monitor release for August-September.

IATA, however, said airlines stocks got a boost in September due to favourable interest from investors as signs emerged of an upturn in this highly cyclical sector.

It has resulted in airlines raising a further US$3 billion debt and US$500 million equity to cash cushion.

" So far this year US$18 billion cash has been raised from capital markets, a sign of caution not optimism," it said.

The third quarter results are expected to be released this month.

-- BERNAMA

IATA said the improvement in both passenger numbers and freight volumes from the first quarter lows accelerated in the first two months of the third quarter, with seasonally adjusted levels for passenger kilometres flown up three per cent on the second quarter and freight volumes up six per cent.

" This upturn has been driven by the recent rise in the economic growth following massive government and central bank stimulus packages," it said.

IATA said forecasters are getting more positive on the fourth quarter but it is still not clear whether economic recovery would continue to strengthen or fizzle out in 2010.

On capacity, it said in the next few months year-on-year numbers would turn positive just because of the comparison with cuts last year.

" If announced winter cuts go through, growth should be limited, but there are upside risks due to low utilisation," it said.

Airlines may not have been able to quickly resize except in the US domestic markets, but having kept capacity flat so far this year, the improvement in passenger demand has fed straight though to improved load factors, it added.