Pilots Blog

More turbulence to come

50 airlines have gone bust since the start of 2008. The twin catalysts of a huge increase in fuel prices and the collapse of passenger numbers due to the recession is proving too much for many carriers. British Airways has just admitted it has lost money through the summer period for the first time in its history. Revenues dropped 12% generating a loss of £124million, compared with a profit of £37million for the same period last year. BA's chief executive, Willie Walsh, has stated that aviation is facing the worst crisis in its history and BA itself is "fighting for survival". Other large carriers are in trouble, Air France-KLM, last week, reported losses of £424million on revenues down 21%. However, both these airlines have been able to secure additional funding through bond issues so, for the time being, they have a cashpile.

For the less established airlines, though, things look pretty grim. IATA is forecasting global industry losses of $9billion on revenues down 15%. There seems little doubt the industry will see a good deal of carnage over the coming year, with many regional airlines being culled or acquired at firesale prices. Identifying the survivors will not be easy.