Airlines Lost USD$3 Billion In First Quarter

The world's airlines lost more than USD$3 billion in the first quarter of 2009, the International Air Transport Association (IATA) said Tuesday, maintaining its estimate for full-year losses of USD$9 billion.

In its latest snapshot on the industry, the Geneva-based lobby group said weak travel demand and lower freight volumes in the global recession had bled revenues for major carriers, in "a significant deterioration from last year."

"This deterioration was before the recent rise in fuel prices," IATA said, warning the 30 percent increase in oil and jet fuel prices since early May would squeeze airline cash flows further in coming months.

Both oil and jet fuel prices have risen almost USD$20 a barrel in the past two months, and are now 75 percent higher than their low point at the end of 2008, the Financial Monitor report said.

"Airlines have not yet felt the full impact of this oil price rise," it said.

But it said it was not changing its previous 2009 loss forecast of USD$9 billion, which follows revised 2008 losses of USD$10.4 billion.

On Tuesday, US crude traded around USD$72 per barrel.

IATA, which represents more than 200 airlines, also said carriers trying to fly fewer flights to save costs during the downturn have not managed to cut capacity in line with shrinking air transport demand.

Leading airlines have been seeking mergers and acquisitions to help build scale and shield themselves against continued market weakness until the global economy recovers.

Delta Air Lines swallowed rival Northwest Airlines last year to create the world's largest airline, and European carriers have also consolidated with Lufthansa agreeing to buy Austrian Airlines and Air France-KLM taking a stake in Alitalia.

British Airways is also in merger talks with Iberia, and Singapore Airlines has said it is eyeing acquisitions in China and India.