Airlines Healthier But More Work Needed

June 4, 2007

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International airline executives were told on Monday their industry is on course to post a USD$5 billion profit this year, but after years of heavy losses it was too little to shout about.

"We are now a USD$470 billion industry, and a profit of USD$5 billion is peanuts... We are moving in the right direction, but the financial hole is deep," International Air Transport Association Chief Executive Giovanni Bisignani said.

Bisignani, speaking at IATA's annual meeting in Vancouver, said that with USD$200 billion in debt the industry was still weak and executives should remember "the economic boom could be a boomerang."

"The increase in plane orders is making efficient aircraft more expensive and harder to get. More importantly, labor pressure on wages could kill productivity gains," he said.

Bisignani's warning to airline unions that "the happy days and free lunch are gone forever" won applause from the airline executives who are gathered for two days of meetings in the Canadian Pacific coast city.

Geneva-based IATA, which includes airlines operating 94 percent of scheduled services, reported last week that air passenger traffic rose by 6.7 percent in the first four months of the year.

Bisignani said the industry can credit itself with becoming more efficient. Five years ago, the carriers needed an oil price of less than USD$20 a barrel to break even but can now sustain nearly USD$70 per barrel, he said.

Bisignani also won applause for a call on governments to better co-ordinate their international security rules and adopt technology that will be less burdensome on passengers.

"Our passengers have been hassled for six years. That's far too much," he said.

Bisignani also renewed IATA's complaint over high rents and landing fees charged by airports, saying it was "outrageous" for airport authorities in cities such as Bangkok, London and Paris to post profits of more than 40 percent.

(Reuters)