Air cargo/global logistics: IATA issues bleak earnings report
Wednesday, 10 June 2009 09:33


Patrick Burnson, Executive Editor -- Logistics Management, 6/9/2009

Analysts and industry experts suggest that air cargo rates have hit bottom, as shippers ask, “will the capacity be there when we need it?”

The International Air Transport Association (IATA) revised its airline financial forecast for 2009 to a global loss of $9 billion today, noting that it is nearly twice as high as the association’s March estimate of a $4.7 billion loss.

IATA also revised its loss estimate for 2008 to $10.4 billion from the previous estimate of $8.5 billion.

“There is no modern precedent for today’s economic meltdown,” said Giovanni Bisignani, IATA’s director general and CEO.  “State of the Industry” address to 500 of the industry’s top leaders gathered in Kuala Lumpur for the 65th IATA Annual General Meeting and World Air Transport Summit, Bisignani painted a bleak picture.

Recession is the most significant factor on the industry’s bottom line, said association analysts.  IATA’s revised forecast sees revenues declining an unprecedented 15 percent ($80 billion) from $528 billion in 2008 to $448 billion in 2009.

Air cargo demand is expected to decline by 17 percent. In 2009, airlines are forecast to carry 33.3 million tons of freight, compared to 40.1 million tons in 2008. Passenger demand is expected to contract by 8 percent to 2.06 billion travelers compared to 2.24 billion in 2008. The revenue impact of falling demand will be further exaggerated by large falls in yields—11 percent for cargo.

“Rates seem to have stabilized,” said Richard Macomber, chairman of the National Industrial Transportation League’s (NITL) air cargo committee. “But that now leaves shippers concerned about finding space when they need it.”

For Bisignani, the situation seemed even more dire.

“The ground has shifted,” he said. “Our industry has been shaken. This is the most difficult situation that the industry has faced.”

IATA noted that following the event of 9/11 revenues fell by 7 percent. It took three years to recover lost ground, even on the back of a strong economy.

“This time we face a 15 percent drop—a loss of revenues of $80 billion—in the middle of a global recession,” said Bisignani.  “Our future depends on a drastic reshaping by partners, governments and industry.”