"The economic recovery being talked about has not yet been felt in the aviation industry, neither abroad nor in Israel," Kobi Zussman, the Israel manager of the International Air Transport Association, told TheMarker this weekend.
Zussman was speaking after returning from the annual convention of IATA executives in Geneva, which focused on the industry crisis. The international organization has 226 member airlines, including Israeli airlines.
Zussman says IATA members incurred losses of $3 billion in the first quarter of 2009.
"The figure corroborates the IATA forecast of $9 billion in losses for 2009. In the las period alone, through the end of June, the price of jet fuel increased by about 30%, which will have a direct, detrimental effect on the airlines' cash flow," Zussman said.
He noted that American airlines, which respond the quickest to market fluctuations, have been cutting back on capacity.
Zussman said it is still too early to say how July and August will be, but the Israel Airports Authority has forecasted that incoming and outgoing international traffic will be 9% less than it was during those months in 2008. He said that accords with the 9.3% drop in global traffic recorded by IATA member airlines in May, as compared to May 2008.
"The good years of growth in the industry are gone," Zussman said. "Today the airlines are battling for survival. They are being forced to employ any means possible in order to remain in business, such as reducing expenses. The most important thing for them is to hold on to their cash."
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