The global airline industry racked up losses of almost $4-billion in the first three quarters of 2008, and share prices for airlines suffered further falls in December.

The International Air Transport Association (Iata) further reported that with additional hedging losses, and recession due to seasonal weakness expected in the fourth quarter, the association’s prior forecast of industry losses at $5-billion for the full year remained.

The organisation recently forecast that indus- try losses for 2009 would be half of those expected for 2008. The global industry was expected to suffer losses of $2,5-billion this year.

From the first to the third quarter of 2007, the industry worldwide recorded net profits of over $17-billion, which was in stark contrast with 2008 figures, which saw losses of some $3,9-billion between the first and third quarters.

About $3,6-billion of the total losses were attributed to US airlines; however, Europe and Asia Pacific were now also in the red.

“Recession is hitting the industry hard, with freight volumes slumping to a four-year low,” Iata stated in a financial health monitor report.

It noted that jet fuel prices had hit a four-year low of about $54/bl by year-end; however, hedging was delaying the benefits decline.

Volatility for jet fuel prices was said to have been unprecedented in 2008, as it started the year at $114/bl, peaked at $180/bl in July, and ended the year at $54/bl.

“Although airlines are cutting capacity, these efforts are lagging far behind the impact of the deepening recession on air transport demand. Load factors on international markets have fallen to levels last seen during the Severe Acute Respiratory Syndrome crisis of 2003,” said Iata.

“Low utilisation of aircraft is clearly a big negative for profitability,” the organisation added.

Share Prices Slump

Compared with figures for the end of 2007, the Bloomberg worldwide airline equity price index was about 60% lower at the end of 2008. The biggest losses were felt by Asia Pacific airlines, largely as a result of the significant falls in air cargo traffic.

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