newstodate.aero
MAR 12, 2003 (newstodate): In a report, the American Air Transport Association predicts dire consequences for the airline industry from a possible was against Iraq.
-Going into the first Gulf War, the airline industry was strong economically, reporting net profits from 1984 through 1989 of $3.9 billion. At that time, airlines also had adequate cash reserves and access to capital markets. Following the war, however, traffic plummeted, causing the industry to shrink significantly. It took the airlines four years to recover from a war lasting fewer than 50 days. In the end, the airline industry lost over $13 billion, eliminated 25,000 jobs and seven large and medium-sized airlines were forced into bankruptcyfour of which liquidated.
-The state of the airline industry today is dire: since 9/11, airlines have lost $18 billion, and even without open hostilities in Iraq, 2003 losses of $6.7 billion are projected. February 2003 fuel prices reached $1.20 per gallon, up 108 percent over the previous year. Additionally, airline cash reserves are nearly exhausted and the ability to borrow is virtually nonexistent. A major contributing factor to the present economic state of the airlines is the vast increase in government-imposed costs. Since 9/11, taxes, fees and unfunded mandates have added $4 billion annually.
The report outlines four scenarios for possible impact on the airline industry. The most likely scenario projects 2003 airline losses of $10.7 billion (an increase of $4 billion over the base line case), the loss of 2,200 daily flights and 70,000 additional jobs. The more severe scenario delineates losses of $13 billion, a reduction of 3,800 daily flights and the elimination of 98,000 additional jobs.
-Going into the first Gulf War, the airline industry was strong economically, reporting net profits from 1984 through 1989 of $3.9 billion. At that time, airlines also had adequate cash reserves and access to capital markets. Following the war, however, traffic plummeted, causing the industry to shrink significantly. It took the airlines four years to recover from a war lasting fewer than 50 days. In the end, the airline industry lost over $13 billion, eliminated 25,000 jobs and seven large and medium-sized airlines were forced into bankruptcyfour of which liquidated.
-The state of the airline industry today is dire: since 9/11, airlines have lost $18 billion, and even without open hostilities in Iraq, 2003 losses of $6.7 billion are projected. February 2003 fuel prices reached $1.20 per gallon, up 108 percent over the previous year. Additionally, airline cash reserves are nearly exhausted and the ability to borrow is virtually nonexistent. A major contributing factor to the present economic state of the airlines is the vast increase in government-imposed costs. Since 9/11, taxes, fees and unfunded mandates have added $4 billion annually.
The report outlines four scenarios for possible impact on the airline industry. The most likely scenario projects 2003 airline losses of $10.7 billion (an increase of $4 billion over the base line case), the loss of 2,200 daily flights and 70,000 additional jobs. The more severe scenario delineates losses of $13 billion, a reduction of 3,800 daily flights and the elimination of 98,000 additional jobs.