AVIATION INDUSTRY TO FACE MORE TURBULENCE THIS YEAR

KUALA LUMPUR, June 4 (Bernama) -- The aviation industry is set to face more
turbulence this year.

Losses loom on the horizon even as the International Air Transport
Association (IATA) gets ready to revise its forecast for 2009 to a further
pessimistic note next Monday, in view of the current economic difficulties
worldwide.

In December 2008, IATA had forecast a loss of US$2.5 billion for this year
and had then revised it to a loss of US$4.7 billion in March.

IATA's director general and chief executive officer, Giovanni Bisignani
said today, a "substantially worse forecast" was expected, despite the cargo
market stabilising at -21 percent from -22 percent previously and probably
touched bottom.

He said cargo was important as it is the most clear indicator as to how the
economy is progressing.

This is especialy so, he added, with aviation handling 37 percent of the
world's cargo in terms of value.

"The economy is not moving forward and we have piles of inventory lying
around. That is the reason why the industry is still in a difficult situation,"
Bisignani told a media briefing here in conjunction with the upcoming IATA
annual general meeting (AGM) next Monday in Kuala Lumpur.

For January to April this year, cargo dropped 22.2 percent globally and
declined 24.7 percent in Asia.

He said the industry was in the "intensive care unit" as airlines' posted a
US$3.3 billion loss in the first quarter of this year and would be seeing
more red ink.

He said the tragedy of September 11 was a shock to the industry, but
the financial meltdown and global economic difficulty, was a crisis.

"After 9/11, the industry lost seven percent of revenue and it took three
years to recover. But this (crisis) is worse.It will take more than three
years to recover from it," he said.

Although cargo was an important indicator, as it constituted 15-20 percent
of an airline's revenue, passenger volume was an even bigger indication for the
industry.

He said from January to April this year, passenger demand had dropped 7.5
percent globally and 11 percent in Asia, with premium traffic down 19
percent worldwide while declining 29.2 percent on the continent.

"Although the fuel cost had fallen substantially since last year, the
collapse in revenue due to the recession, was having a larger impact on
financial performance.

"This year, we are forecasting the fuel price to be at US$56 per barrel, so
we'll have savings. But it won't balance the loss in revenue. There may be a
change in the fuel price which we do not see as yet," he added.-- BERNAMA