Panama Jack
31st May 2005, 10:41
News from Russia (http://newsfromrussia.com/world/2005/05/30/60051.html)
High fuel prices meant the airline crisis
23:46 2005-05-30
Governments have been warned to stop treating air transport like a cash cow, amid projections showing global airline losses will grow 25per cent this year to $US6billion ($7.9billion).
International Air Transport Association director-general Giovanni Bisignani warned yesterday that high fuel prices meant the industry's crisis had continued and governments that had lost their way were not delivering the change demanded by industry, travellers and the global economy.
IATA estimates airlines' global fuel bill this year will be $US83billion, equivalent to the gross national product of New Zealand and $US39billion more than in 2003.
The global airline body has increased its loss prediction by $US500million since April, when its estimate for the 2005 global fuel bill was $US7billion lower at $US76billion. Losses in 2004 totalled $US4.8billion, informs the Australian.
According to the Financial Times, the fuel bill, which now accounts for around 22 percent of the industry's total costs has jumped by $39 billion in two years, and has overwhelmed airlines' efforts to cut costs.
Non-fuel costs had been reduced by 2-3 percent a year and were forecast to fall by 4.5 percent this year, said Mr. Bisignani, while passenger traffic was forecast to rise by 5.4 percent.
Global airline cumulative net losses are forecast to reach $42 billion in the five years 2001-05, but the bulk of the losses have come in the U.S.
U.S. carriers had net losses of $9.1 billion last year compared with net profits of $2.6 billion earned by Asia Pacific airlines and profits of $1.4 billion made by European carriers.
Non-U.S. airlines have had some protection from the oil price rise because of the weakness of the U.S. dollar, and U.S. carriers have also been unable to hedge their fuel requirements significantly because of their weak finances and low credit ratings.
Mr. Bisignani said that efficiency gains could not make up for structural problems in the U.S., where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In Latin America the majority of carriers were technically bankrupt.
In Europe consolidation had helped capacity management, while Asian carriers had the competitive advantage of low labor costs, and strong growth fueled by China. India may also be "the next great market for the industry," he said.
NR
In the past there has been discussion by numerous airline CEO's and other aviation industry figures (as well as on this forum) about the way cash-strapped Latin American governments view the airline industry as a cash cow. Obviously, this is an international phenonemon.
The second to last paragraph caught my eye. "In Latin America the majority of carriers were technically bankrupt." :oh: Not a great testimonial to the state of our industry.
I'm wondering which carriers are actually healthy in our region. LAN seems to be the industry leader and publishes regular financial results to support their claims. Others are less transparent. The Brazilian low-cost carrier, Gol, seems to be another industry darling, and it seems like Copa Airlines and Grupo TACA are doing well financially (although I've never seen any published results). I am never sure on how the Mexican carriers are doing-- aircraft orders and new routes are not often an indicator of success or health. Any thoughts? Are there any companies that I've missed or did I name ones that are not as well off as they appear to me?
High fuel prices meant the airline crisis
23:46 2005-05-30
Governments have been warned to stop treating air transport like a cash cow, amid projections showing global airline losses will grow 25per cent this year to $US6billion ($7.9billion).
International Air Transport Association director-general Giovanni Bisignani warned yesterday that high fuel prices meant the industry's crisis had continued and governments that had lost their way were not delivering the change demanded by industry, travellers and the global economy.
IATA estimates airlines' global fuel bill this year will be $US83billion, equivalent to the gross national product of New Zealand and $US39billion more than in 2003.
The global airline body has increased its loss prediction by $US500million since April, when its estimate for the 2005 global fuel bill was $US7billion lower at $US76billion. Losses in 2004 totalled $US4.8billion, informs the Australian.
According to the Financial Times, the fuel bill, which now accounts for around 22 percent of the industry's total costs has jumped by $39 billion in two years, and has overwhelmed airlines' efforts to cut costs.
Non-fuel costs had been reduced by 2-3 percent a year and were forecast to fall by 4.5 percent this year, said Mr. Bisignani, while passenger traffic was forecast to rise by 5.4 percent.
Global airline cumulative net losses are forecast to reach $42 billion in the five years 2001-05, but the bulk of the losses have come in the U.S.
U.S. carriers had net losses of $9.1 billion last year compared with net profits of $2.6 billion earned by Asia Pacific airlines and profits of $1.4 billion made by European carriers.
Non-U.S. airlines have had some protection from the oil price rise because of the weakness of the U.S. dollar, and U.S. carriers have also been unable to hedge their fuel requirements significantly because of their weak finances and low credit ratings.
Mr. Bisignani said that efficiency gains could not make up for structural problems in the U.S., where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In Latin America the majority of carriers were technically bankrupt.
In Europe consolidation had helped capacity management, while Asian carriers had the competitive advantage of low labor costs, and strong growth fueled by China. India may also be "the next great market for the industry," he said.
NR
In the past there has been discussion by numerous airline CEO's and other aviation industry figures (as well as on this forum) about the way cash-strapped Latin American governments view the airline industry as a cash cow. Obviously, this is an international phenonemon.
The second to last paragraph caught my eye. "In Latin America the majority of carriers were technically bankrupt." :oh: Not a great testimonial to the state of our industry.
I'm wondering which carriers are actually healthy in our region. LAN seems to be the industry leader and publishes regular financial results to support their claims. Others are less transparent. The Brazilian low-cost carrier, Gol, seems to be another industry darling, and it seems like Copa Airlines and Grupo TACA are doing well financially (although I've never seen any published results). I am never sure on how the Mexican carriers are doing-- aircraft orders and new routes are not often an indicator of success or health. Any thoughts? Are there any companies that I've missed or did I name ones that are not as well off as they appear to me?