The combined losses of the world's largest airlines could jump to as much as US$12 billion this year in the wake of the terrorist attacks on the United States last month, according to the International Air Transport Association (Iata). Iata, which represents 280 of the world's largest airlines, said losses on international scheduled services may rise nearly threefold to US$7 billion from estimates made before the September 11 attacks in which hijacked airliners were used as weapons on the World Trade Centre and the Pentagon. 'To that loss, you would have to add - to get a fuller world picture - the US$3 billion to US$5 billion in losses of US carriers on their domestic services,' Iata director-general Pierre Jeanniot said on a visit to Hong Kong yesterday. The airline industry, which was already struggling due to a global economic downturn prior to the attacks, now also has to deal with steep decline in passenger traffic and significantly higher costs for insurance premiums, which have increased nearly tenfold, he said. In recent weeks nearly 100,000 jobs have been lost in the US airline sector and Asian airlines have now begun jumping on the global bandwagon to shrink operations in the face of the adverse industry conditions. Taiwanese flag carrier China Airlines yesterday announced the temporary cancellation of 12 transpacific services, while Korean Airlines said it would attempt to sell 10 grounded airliners out of a fleet of 114 aircraft. Singapore Airlines (SIA) said on Monday that management salaries would be cut between 7 and 15 per cent. 'Before September 11, I was going to tell you of a forecast loss this year of US$2.5 billion on the international scheduled services of Iata airlines worldwide. This was to be the first loss for the industry since 1993,' Mr Jeanniot said. 'One scenario we are looking at is a net loss of US$7 billion on those services if traffic and capacity are both cut during September to December by 15 per cent,' he said. This would translate into a reduction of traffic for the year of nearly 5 per cent and a 3 per cent reduction in capacity, he said, adding that job losses in the industry worldwide were likely to be closer to 200,000. Mr Jeanniot also warned that 'a number of airlines remained in financial trouble' and were at risk of collapse in coming months. 'It is a critical time. The next six months are going to see some more failures,' he said. About 10 per cent of Iata's member airlines were in fragile financial shape, but most of these airlines were taking aggressive action to head off their troubles by moving to cut costs, he said. Analysts said it was unlikely any Asian airlines were in danger of collapse, however. There were at least half a dozen large Asian airlines 'that are very close to the wind with regards to their leverage profile and cash positions', said Timothy Ross, an Auckland-based aviation analyst with UBS Warburg. Because of the close relationship most Asian airlines shared with their home governments, in the case of collapse 'they would most likely be bailed out by their governments, as in the case of Air New Zealand', Mr Ross said. For Asian carriers, US-bound services have suffered the most as a result of the downturn in traffic. Cathay Pacific Airways' director of corporate development Tony Tyler said: 'Loads have collapsed on Pacific routes.' The airline's load factors for transpacific routes, normally 70 to 80 per cent, have fallen to 50 per cent since September 11. When asked if Cathay was losing money on the flights, Mr Tyler said ticket sales were covering short-term 'cash costs'. China Airlines' vice-president of corporate communications Paul Wang said load factors on the Taiwanese carrier's transpacific services had fallen 7.2 percentage points to 62.3 per cent since the terrorist attacks. However, its problems last month were compounded by the worst typhoon to have hit Taiwan in decades. Meanwhile, another Cathay spokesman said the company would not be pressured by SIA's moves to conduct a cost cutting exercise of its own. 'We are aware that some other airlines and companies have been' making moves to cut operational expenses by reducing services and staff costs, she said. 'But we will continue a review of our own operations and take action based on Cathay's needs and what we have to do in order to maintain our long-term competitiveness,' she said.