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Airline Losses 'hit $1bn A Month'

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http://news.bbc.co.uk/1/hi/business/8231714.stm

Airlines are likely to have lost more than $6bn (£3.7bn) in the first half of 2009, according to the International Air Transport Association (Iata).

This figure - an average of $1bn a month - is double the amount Iata said in December that airlines would lose during the whole of 2009.

Airlines made losses between April and June, when they would usually make 50% of their annual profits, Iata said.

Meanwhile, budget airline SkyEurope has filed for bankruptcy.

The loss-making Slovakian airline, which was set up in 2001, has suspended all flights with immediate effect.

And American Airlines has said it is cutting 921 flight attendant jobs as it deals with a downturn in passengers, and lower revenue.

Bigger losses

Iata said passenger and freight volumes are starting to improve.

Both rose more than 3% in July from the previous month, although they remain well below levels seen at the same time last year.

"There was a material improvement in July, but the future path is likely to be volatile and weaker than normal recoveries," Iata said.

European and Asian airlines fared the worst.

Collectively, 12 airlines in Europe lost $1.1bn between April and June, compared with a profit of $439m in the same period of 2008.

In the Asia-Pacific region, 16 airlines lost $1.3bn, compared with losses of $958m a year earlier.

Airlines in North America actually lost less money - $134m against losses of $419m in the second quarter of last year.

Those in Latin America and the Middle East returned bigger profits.

'Cash burn'

The global recession has had a major impact on the industry, with business and leisure customers cutting back on travel, and companies transporting far less cargo.

Rising oil prices have also made fuel more expensive, "intensifying airline cash burn," Iata said.

Despite the problems in the sector, airline share prices rose 3.6% in August from July's levels, the association said.

Carriers have taken advantage of these rising share prices to raise $15bn to help bolster dwindling cash reserves.

When they mean things are improving are they meaning they simply won't be losing money as fast (or think they won't be losing money as fast).

It appears that the Airlines are helping to create the jobless recovery by sacking people.

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The airlines are the canaries in the coal mine for the global economy - it has to be functioning almost perfectly for them to stay in existence.

I suspect they may be the first candidates for a new wave of nationalisation that will happen for certain "key" industries.

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