Airlines 'face losses of $4.7 billion'

The airline industry association IATA on Tuesday sharply increased its loss forecast for carriers to 4.7 billion dollars (3.4 billion euros) this year due to a "rapid deterioration of the global economic conditions."

The new forecast given at the International Air Transport Association's annual media event marked a sharp rise from the 2.5 billion dollars in losses predicted by IATA in December.

The industry group also raised its estimate of total airline losses for 2008 from 8.0 billion dollars to 8.5 billion dollars, blaming a "very sharp fall in premium travel and cargo travel."

"The state of the airline industry today is grim," said Giovanni Bisignani, IATA's director general.

"Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago."

"There is little to indicate an early end to the downturn," he added, predicting a "grim 2009".

Although the airline industry's prospects may improve towards the end of the year, "expecting a significant recovery in 2010 would require more optimism than realism," Bisignani insisted.

Demand is expected to continue to slide, with passenger traffic shrinking by 5.7 percent over the year.

Asian-Pacific carriers are expected to post the biggest losses this year of 1.7 billion dollars as demand tumble 6.8 percent.

European carriers are forecast to post 1.0 billion dollars in losses while Middle east carriers are seen losing 900 million dollars.

Only North American carriers would post a profit of 100 million dollars, as they benefit from sound capacity management and lower fuel prices, according to IATA.