July 30, 2009 / 8:41 AM / in 8 years

UPDATE 1-Airlines carry less cargo, fewer people in June-IATA

3 Min Read

* International cargo traffic falls, passenger demand weak

* IATA sees no early economic recovery, says outlook "bleak"

(Adds details, background)

By Laura MacInnis

GENEVA, July 30 (Reuters) - Airlines carried 16.5 percent less cargo and 7.2 percent fewer people in June than the same month a year ago, with no sign yet of the global recession lifting, an industry body said on Thursday.

In its latest monthly reading of cross-border traffic, the International Air Transport Association said it could take years for air freight -- a leading indicator of the health of world trade -- to return to 2008 levels.

"These are extremely challenging times for airlines. There are no signs of an early economic recovery," IATA said, warning that continued weakness could spell trouble for carriers.

"Airlines are seeing international revenue falls of up to 30 percent at the start of the busy June-August period when airlines traditionally make their money. The outlook remains bleak," IATA Director-General Giovanni Bisignani said.

IATA has estimated airlines will lose $9 billion in 2009 after shedding $8.5 billion in 2008, when high oil prices hit profits amd then the global credit and financial crisis slashed demand for business and leisure air travel. [ID:nL8380291]

The Geneva-based body, which represents 230 carriers including United Airlines UAUA.O, Cathay Pacific (0293.HK), Emirates [EMIRA.UL] and British Airways BAY.L, said there were further risks in 2009 from rising oil prices and fears of the H1N1 pandemic flu that could further suppress passenger demand.

Air cargo traffic has fallen for 13 consecutive months on a year-on-year basis, reflecting both fewer shipments of goods for sale and the reliance of some exporters on more ocean transport during the recession, which has weakened consumer demand.

"At the current pace, it will likely take several years before demand returns to early 2008 levels," IATA said of cargo.

IATA said there were some signs of increased activity in China and other emerging Asian countries in June, but said these were eclipsed by weakness in Europe and North America where consumers "choose to repay debt rather than increase spending."

Airlines have been slashing fares in both business and economy class to encourage people to keep flying during the recession, and "after years of cost reduction, the scope for further cuts is limited," IATA warned.

"Flexibility is critical in finding new sources of capital and new markets," it said. (For the full IATA statement, see: www.iata.org)

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