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Asia Pacific airlines post $4.3 billion losses in 2008

Posted on: May 7, 2009


By EILEEN NG,Associated Press Writer

AP – Wednesday, April 29

KUALA LUMPUR, Malaysia – Asia-Pacific airlines suffered deeper-than-expected losses of $4.3 billion last year due to sharply higher fuel costs and dwindling demand amid the global economic slump, an industry group said Tuesday.

The Kuala Lumpur-based Association of Asia Pacific Airlines said combined revenue for its 17 members rose 6 percent in 2008 to $103 billion, but failed to keep pace with higher fuel costs.

Oil prices last year averaged $97 a barrel, up from $72 in 2007. This caused the fuel bill for the 17 airlines to swell by almost $10 billion to $38.1 billion in 2008, accounting for 35 percent of total costs, the association said.

Many airlines also suffered losses on fuel hedging contracts and adverse currency exchange movements, resulting in the region’s airlines reporting a total net loss of $4.3 billion, reversing from 2007 profit of $4 billion.

“Oil prices have fallen back but the real challenge is weak demand. In every aspect, the challenges we are facing in 2009 are even tougher than last year,” AAPA’s director-general Andrew Herdman told the Associated Press.

In the first quarter this year, international air cargo volumes plunged 25 percent while passenger traffic was down 11 percent, he said.

Air fares have also fallen worldwide, further squeezing airline profit margins.

“The current swine flu outbreak adds a further element of unpredictability to the situation,” Herdman said.

The AAPA doesn’t provide a profit forecast.

As a group, the AAPA represents roughly one-fifth of global passenger traffic and one-third of global cargo traffic.

The International Air Transport Association has said the Asia Pacific region will be the hardest hit this year, forecasting losses of $1.7 billion.

The AAPA represents Air New Zealand, All Nippon Airways, Asiana Airlines, Cathay Pacific Airways, China Airlines, Dragonair, EVA Air, Garuda Indonesia, Japan Airlines, Korean Air, Malaysia Airlines, Philippine Airlines, Qantas Airways, Royal Brunei Airlines, Singapore Airlines, Thai Airways International and Vietnam Airlines.

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