‘Expect more airline casualties in months ahead’

Airlines are not expected to emerge from the global financial crisis unscathed, the International Air Transport Association (Iata) said last week, announcing a revised global financial forecast predicting more losses. Speaking from Washington DC, Giovanni Bisignani, Iata director general and CEO, said some 29 airlines had gone out of business since 2008. “And we expect more casualties in the coming months,” said Bisignani. “Cash is king at present. Many of the larger airlines have built up cash reserves in the past ten months through debt and equity and it serves them as a sort of war chest with which to fight the crisis. It does mean however that critical investments are put on hold.” Smaller airlines, said Bisignani, had no reserves and were still relying on banks that are still not lending. “In the past few months we have seen medium size airlines go out of business – size at this stage is relative. We are expecting the situation to become worse and if the yields continue to go down we are looking at a long-term disaster.” He said Iata was investing in several programmes to help airlines cut costs and manage capacity such as the e-freight system. “We want to take the paper out of cargo, but it is a complicated programme and it needs government buy-in. It will take time but we hope to see at least 80% of countries running freight implementing this e-freight system by 2010 as it will go a long way in conserving cash and making the business more efficient.” Bisignani said it was about finding ways of keeping airlines afloat during this critical period that was still far from over for the industry. “But this is not an airlineonly crisis. There is less cash coming into the industry and the entire value chain must be prepared for change. All our business partners – including airports, air navigation service providers, global distribution systems – must be prepared to cut costs and improve efficiencies. Some airports have delivered cost reductions, but not in line with the magnitude of the changes to the industry cash flow.” It was important that monopoly providers also realised the severity of the situation and got on board in helping to build efficiencies, he said.