IATA: Intl airline travel is back, but profits still AWOL for U.S. carriers

This decade has been a real roller coaster ride when it comes to the number of passengers flying on international routes on the worlds airlines.

The fallout from the 9/11 terrorist attacks, the SARS outbreak and the war in Iraq and the subsequent return of travelers after things settled down has led to big swings in the amount of passenger traffic on international routes each year.

IATA said it believes that 2005 might have been the year when international traffic on the worlds airlines returned to a more normal growth pattern for the first time since 9/11.

IATA estimates released in late January showed passenger traffic on international routes grew by 7.6% in 2005. Thats actually much lower than in 2004, a year in which traffic skyrocketed by 15.3% as travel rebounded from the start of the Iraq war and the SARS outbreak in 2003. But 2005s increase is still above the historical growth rate of 6% a year, IATA said.

IATA also said the increase in load factor -- the percentage of seats filled with paying passengers -- reflected the industrys restrained response to growth by not adding too much capacity to the system.

Obviously, the past two years of traffic growth have not necessarily translated into profits, especially for U.S. carriers.

There are a few U.S. airlines that have yet to report year-end results, but IATA is estimating their cumulative loss will reach $10 billion.

Airlines, as a whole, produced a $1.3 billion profit in Europe and a $1.5 billion profit in Asia in 2005. But that wasnt enough to compensate for U.S. airline losses, so the combined results of almost all of the worlds airlines with international service came to an estimated loss of $6 billion.

Furthermore, although IATA is forecasting international traffic will grow another 5% to 6% this year, it still is expecting a cumulative loss of $4 billion in 2006.

The industry already had accumulated cumulative losses of $36 billion between 2001 and 2004.

Growth and profitability are completely different concepts, said Giovanni Bisignani, IATAs director general and CEO. The industry will not see black ink until at least 2007.


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