Airlines Face Continued Tough Times, According to Air Transport World magazine.

Business Editors/Travel Writers

WASHINGTON--(BUSINESS WIRE)--Dec. 30, 2002

The world's airlines face continued losses in 2003, especially US-based carriers that are forecast to lose $4 billion, says airline industry management magazine Air Transport World (ATW). The loss in the US will keep the combined financial results for the world's airlines firmly negative, with a net loss of $1.8 billion, ATW predicts.

Writing in the magazine's annual forecast issue, ATW Editorial Director J.A. Donoghue notes the improvements expected in 2003 will simply lessen the rate at which the industry is losing money, easing from the record $30 billion losses of the 2001-2002 period.

The world's airlines will report losses of $12 billion in 2002, says ATW. The weakest market has been and remains the U.S., where airlines will report 2002 net losses of $9.8 billion. Combined with the $7.7 billion lost in 2001 despite $5 billion in government support, the $17.5 billion net loss in the US has driven two major carriers into bankruptcy and caused more than 110,000 job losses. However, low-fare airlines in the US have prospered during the tough times, recording profits and expanding while major airlines lose money and shrink.

Traffic will grow in 2003 after two years of declines, the longest such period since World War II, ATW says. The world outside the US will regain 2000 traffic levels, while US airlines must wait until 2004 to reach that mark. In contrast, airlines of the Asia/Pacific region show solid growth and most are profitable, a trend that will strengthen in 2003.

European airlines made sharp cuts in 2001 that helped many stay profitable but now face an uncertain future as economies in the region falter and the carriers feel the increasing impact of low-fare airlines and Internet ticket sales pushing fares down, two factors driving US losses.

In the US, major airlines that rely on hub networks face the task of having to overhaul their basic business structures, perhaps taking cues from the low-fare airlines' success.

The ATW forecast is available in the January issue of Air Transport World, and also can be found on ATW's website, ATWOnline.com, on Dec. 30.

ATW is published by Penton Media (NYSE:PME), a leading business-to-business media company with magazines, events and online media serving 12 industries, including the airline industry. For more information, visit www.penton.com.