Cathay Pacific chief predicts another bad year for industry

CATHAY Pacific managing director Rod Eddington estimates that airlines worldwide lost up to US$6 billion last year and warns that this year will probably be every bit as bad.

''The challenge has to be to try and come through 1993 reasonably unscathed in the hope that when the upturn does take place, whether it be in 1994 or 1995, that as a business you are not so decimated and not disadvantaged financially so that it takes you two years to recover,'' Mr Eddington told international air cargo industry leaders in Hongkong yesterday.

In 1991, world airlines had lost between $2.5 billion and $3 billion.

At the beginning of last year, the secretary-general of the International Air Transport Association (IATA) thought airlines would be in the black by $300 million in 1992, a prediction based on forecasts received from airlines around the world.

There is no doubt that that estimate was overwhelmingly wrong.

The top 10 carriers in the United States have already revealed they lost $5.5 billion in 1992, a sum that admittedly included one-off payments for retirement plans and redundancies as the industry streamlined its workforce.

Lufthansa and Air France have each made operating losses of more than $500 million and Japan Air Lines is expected to report losses of $400 million.

Mr Eddington, speaking at the International Air Cargo and Express Conference, said: ''My guess is that worldwide in 1992 airlines will lose substantially more than they did in 1991 and maybe you are talking worldwide of minus $5 billion or minus $6 billion.'' The final figure is unavailable because some airlines have not yet announced their 1992 results.

While some US airlines have indicated there are signs of recovery in the industry, there are no such signs in Europe, and Japan is still in recession.

Mr Eddington said: ''The cargo and passenger markets out of Japan are extremely weak at the moment, with absolutely no sign of recovery in the latter part of the year.

''Cathay Pacific has 70 wide-bodied aircraft flights a week to Japan. It is a huge operation for us, so I think there are real causes for concern in 1993 because the Japanese, United States and European markets are so weak.'' He concluded: ''I have to say I am no optimist for 1993. I think it is going to be every bit as tough as 1992.''