Things in the Sky

Today, IATA released an updated financial forecast for 2010, and the trade group now predicts that the industry will now lose only $2.8 billion dollars. Yes, we should be happy about that, considering the previous forecast was for double that amount – $5.6 billion. In addition, IATA is forecasting that the total losses for 2009 will amount to $9.4 billion, $1.6 billion less than previously forecast.

So why the optimism? “The improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010. Relatively flat capacity translated into some yield improvement and stronger revenues,” the group reports.

IATA also released some interesting slides, so here are some of the ones I found interesting:

Those of us in North America will experience losses of $1.8 billion, second only to Europe with a $2.2 billion loss. It appears that the emerging economies will be leading the recovery, especially Latin America. IATA says that region wll perform well because “economic ties to Asia helped isolate the region from the worst of the financial crisis. Carriers in parts of the region have benefitted from liberalized markets which have facilitated some cross-border consolidation, giving greater flexibility to deal with changing economic conditions.”

I’ve written here before about the amounts of capacity that have been taken out of airline schedules, and that’s really been helping load factors, and by definition, RASM performance. IATA also predicts that restricted reply will help boost yields very slightly in 2010 – a 2.0% increase for passenger traffic.

Finally, here’s a graph of revenues. Basically, there’s an improvement, but there’s a lot of lost ground to recover here, especially when it comes to the high-yield premium passengers.

Basically, there’s a long road ahead, especially in the North American and European regions. But at least the recovery seems a bit stronger than originally forecasted.

You can see IATA’s industry outlook here.