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The world's airlines will have losses of US$10 billion this year as passengers avoid flying after the respiratory disease outbreak in Asia, said the International Air Transport Association.
IATA forecasts that the industry losses, a total of US$4 billion on US domestic routes and the rest on international routes, are worse than those triggered by fighting in Iraq, Giovanni Bisignani, the association's director general, said at a press conference.
"The impact (of SARS) has been much, much greater than what happened in the Iraq war," said Bisignani, who estimates global industry losses will total US$30 billion since the September 11 attacks. "The last three years have been the worst since civil aviation started."
The outbreak of severe acute respiratory syndrome has infected 6,600 people and killed 479 worldwide since it was first reported in China two months ago. China, which has reported 60 percent of the global cases, has quarantined thousands of people in an effort to stop the spread of the respiratory virus.
Passenger volumes "dropped dramatically" because of the virus, said Bisignani, saying numbers fell as much as 60 percent in Hong Kong, 40 percent in Singapore and Seoul and 37 percent in Beijing and Kuala Lumpur. In areas that haven't been affected by SARS, he said, passenger numbers have fallen between 10 percent and 15 percent.
The association doesn't have statistics to show the effect of SARS compared with war, association spokeswoman Wanda Warner said.
Nine of the largest US carriers, including AMR Corp's American Airlines and UAL Corp's United Airlines, have posted US$3.56 billion in losses for the first quarter, which is typically the worst of the year. Of those, only Southwest Airlines Co had a profit. US Airways Group Inc has yet to report results.
SARS and the war in Iraq will probably mean a deterioration in results for Asian and European carriers compared with last year, while US industry losses aren't expected to be as bad as in 2002, said Goldman Sachs analyst Glenn Engel.
"In 2003, I would expect modest improvement in the US and the rest of the world is likely to show a worse year," Engel said.
Cathay Pacific Airways Ltd, Asia's fifth-biggest carrier, said it will cut its final dividend by half, saving about US$120 million, after the SARS virus sparked the biggest plunge in bookings in the airline's 57-year history. Deutsche Lufthansa AG, Europe's third-largest airline, is losing 55 million euros (US$62.41 million) in sales a week.
IATA, which represents 277 airlines, has called on governments to cut landing fees and air traffic control charges in an attempt to lower airline costs at airports during the SARS crisis. Singapore, Malaysia, Thailand and the Philippines have already agreed to help, said Bisignani.
(eastday.com May 7, 2003)
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