Group says airlines may lose $8 billion

By Brad Foss
Associated Press

NEW YORK — The Air Transport Association, a trade group, is predicting that the airline industry could easily lose $8 billion by the end of the year, exceeding the record-breaking losses of 2001.

David Swierenga, the trade group's chief economist, said yesterday that major carriers are on course to lose $1.5 billion to $2 billion in the third quarter and $2.5 billion to $3.5 billion in the fourth quarter, reflecting a seasonal decline in the last three months of the year.

Airlines lost $3.8 billion in the first half of the year and revenue remains down about 15 percent on average, Swierenga said.

In 2001, airlines had a combined net loss of $7.7 billion, although that included the effect of $5 billion in cash paid out by the federal government as part of a bailout approved by Congress after the terrorist attacks.

Passenger traffic remains weak, with 10 percent less people boarding planes in August compared with a year ago, when the demand for travel had already been sharply crimped because of the economic downturn.

Another problem is increased bargain-hunting by business travelers, who traditionally have paid more than leisure travelers. By hunting for fares on the Internet and purchasing in advance, business travelers have seen huge savings.

The economy remains fragile and talk of war with Iraq has caused jet fuel prices to rise and investors to worry about a dropoff in international travel.

Executives are worried that a war in Iraq could cause more financial damage and force the weakest carriers into bankruptcy.

Chief executives of American, Delta and Northwest lobbied Congress on Tuesday, seeking government assistance for terrorism insurance and the extension of a $10 billion loan guarantee program in the event of war, among other requests.

US Airways is restructuring under Chapter 11 and United Airlines is considered by many to be the next likely candidate.