During 2005, the U.S. airlines lost $8 billion while European airlines as a group broke about even.
Asian carriers as a group recorded about a bit more than a billion USD in profits. Through it all the price of oil remained the biggest, single challenge to the future of aviation.
Summing up the problem, International Air Transport Association (IATA) Director General and CEO, Giovanni Bisignani said:
“The extraordinary price of oil is destroying the industry's profitability. Cost savings and other efforts while impressive, are still not enough to pull the industry out of the red. It is no secret that we are going through the worst crisis in our history. US$6 billion in losses for 2005. US$42 in cumulative losses since 2001. The situation for 2006 will see losses reduced to US$4.3 billion. We might even make money in 2007. But a projected profit in 2007 of US$6 billion would be a 1.5% profit margin that does not cover the cost of capital. The break-even price for crude went from US$22 per barrel in 2003 to US$34 in 2004 to US$48 in 2005. In 2006 we expect to break-even at US$50. But it is not until 2007 that we see a profitable break-even price of US$55.â€
That statement is endorsed by another respected aviation analyst:
"I'm turning more bullish on airlines after being negative for the last five years," said Julius Maldutis, right president of consulting firm Aviation Dynamics.
"There's a case to be made that 2006 will be a transition year and the industry will return to profitability in 2007."
Air Cargo News
Asian carriers as a group recorded about a bit more than a billion USD in profits. Through it all the price of oil remained the biggest, single challenge to the future of aviation.
Summing up the problem, International Air Transport Association (IATA) Director General and CEO, Giovanni Bisignani said:
“The extraordinary price of oil is destroying the industry's profitability. Cost savings and other efforts while impressive, are still not enough to pull the industry out of the red. It is no secret that we are going through the worst crisis in our history. US$6 billion in losses for 2005. US$42 in cumulative losses since 2001. The situation for 2006 will see losses reduced to US$4.3 billion. We might even make money in 2007. But a projected profit in 2007 of US$6 billion would be a 1.5% profit margin that does not cover the cost of capital. The break-even price for crude went from US$22 per barrel in 2003 to US$34 in 2004 to US$48 in 2005. In 2006 we expect to break-even at US$50. But it is not until 2007 that we see a profitable break-even price of US$55.â€
That statement is endorsed by another respected aviation analyst:
"I'm turning more bullish on airlines after being negative for the last five years," said Julius Maldutis, right president of consulting firm Aviation Dynamics.
"There's a case to be made that 2006 will be a transition year and the industry will return to profitability in 2007."
Air Cargo News
