Worldwide airline losses reached eight billion USD in 2008

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Airlines around the world lost a cumulative total of nearly $8 billion last year due to a fourth-quarter decline that was more severe than anticipated, due largely to the recession and losses due to fuel hedging hitting carriers toward the end of the year, according to the International Air Transport Association (IATA).

Losses were broader than the $5 billion deficit that had been predicted by IATA in December due to a deficit of $4 billion for the last quarter that had not been expected, the industry association said in a statement.

The figures for 2008 are coming out as signs are beginning to indicate that 2009 might be worse for airlines than had been originally forecast. At the end of 2008, IATA was predicting a decline in international air passenger traffic of around three per cent for 2009. Last month, however, the association reported that in January alone traffic fell by 5.6 per cent. This was the fifth consecutive month of traffic declines, and was led by airlines in Asia.

“Airlines are responding to the slump in demand by trying to shrink capacity to match,” the IATA said. “So far, with the exception of U.S. domestic markets, they have been unsuccessful.”

In January, airlines grounded 73 planes in a move that was inadequate to align supply with declining demand, as seat-occupancy rates dropped by an average of three percentage points for the month.

Thanks to www.bloomberg.com for the above quotes, for more information on this article please visit their website.

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