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Wed, Feb 25, 2004

Silver Lining For World's Airlines

Airlines Begin To Report First Profit Since 9-11

An international airline organization claims the world airline industry is expected to bounce back into profit this year for the first time since it was plunged into crisis by the September 11 attacks in 2001.

Giovanni Bisignani, director-general of the International Air Transport Association (IATA), said on Monday he expected his 271 members to make profits of between $2bn and $4bn on international scheduled services due to a combination of cost cutting and passenger growth. This compares with a loss of about $5bn last year. Overall, including domestic operations not included in IATA estimates, the industry has racked up losses of more than $30bn since 2001.

"We are seeing a booming kind of market," Mr Bisignani said, dismissing fears that the recent outbreak of bird flu would have the same damaging effect on Asian airlines as the SARS outbreak did last year, unless there was evidence of it human-to-human transmission.

Asian airlines are expected to drive the upturn with IATA predicting growth in the region of 14 percent this year. Overall, global passenger traffic is forecast to rise 7 per cent in 2004. But the growth is from a lower base than before the September 11 attacks, as most of the big airlines sharply cut back capacity as they struggled to fill seats.

"The industry lost so much ground after September 11 that we are only now back to where we were in 2000," Mr Bisignani said.

The bullish predictions by IATA come against a backdrop of strong financial performances among Asian and European airlines, including big carriers such as Singapore Airlines and British Airways. The US airline industry, which was hit harder than the rest of the world, is also showing signs of recovery, with carriers reporting reduced losses, down from record levels.

Mr. Bisignani, however, renewed calls from the trade association to governments to absorb more of the security costs facing the industry. Recent scares have grounded a number of Europe an and North American airlines in recent months. He estimated that the cost of complying with post-September 11 security measures, imposed largely by the US authorities, was costing IATA members "well over" $5bn.

FMI: www.iata.org

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