IN THE FIRST SEMESTER OF THIS YEAR, "Tarom" lost almost 45 million lei

Amid the global economic recession, Romanian airline "Tarom" had an average number of passengers of 765,000 in the first semester of this year, meaning an average occupancy rate of 50.33%, 11.7% less than the estimates in the revenue and expenses budget. According to data from the Minister of Transports and Infrastructure (MTI), "Tarom" recorded a loss of 44.738 million lei, as opposed to the estimated loss of 8.654 million lei.

According to officials of the MTI, one of the reasons for these losses is the drop in direct foreign investments in Romania, which caused a decrease in the need for transportation, with Romania being one of the most affected countries in the European Union. Direct foreign investments in Romania dropped 42.9% y/y, from 5.07 billion Euros to 2.8 billion Euros in 2009, according to data by the NBR, as quoted by the Ministry of Transports.

• Tarom"s number of flights to foreign destinations decreased by 477 y/y in H1 2009

Due to the shrinking number of passengers, the number of "Tarom" flights to foreign destinations dropped by 477, compared to H1 2008 (-9.7%). In the first six months of 2009, the company transported over 901,500 passengers, with an average occupancy rate of 62%.

According to the Association of European Airlines (AEA), several airlines operating in Romania saw their airlines traffic decrease: "Tarom" (-14,2%), "Austrian Airlines" (-12,1%), "Air France" (-6,7%), "British Airways" (-5,7%), "KLM" (- 7%), "Czech Airlines" (-9,6%,) "Lufthansa" (- 6,4%).

"Tarom" lost 11 million Euros in 2009, whereas "Alitalia" lost 273 million Euros, "Austrian Airlines" - 166 million Euros, "Czech Airlines" - 73 million Euros, and "Lufthansa" - 216 million Euros.

• 9 billion dollars, the total losses of the airline industry for the year

An estimate by the International Air Transport Association (IATA), puts the total losses of the industry at 9 billion dollars for this year. The Geneva based organization, which brings together over 230 airlines from all over the world, (93% of the international airline traffic) recently announced the industry lost 6 billion dollars in the first semester of 2009. IATA said that the decline in passenger traffic slowed down in July 2009, but warned that airlines are still facing major financial difficulties, due to a severe drop in earnings.

International demand for passenger traffic dropped 2.9% y/y (2009/2008), which is a relative improvement over the 7.2% drop recorded in June 2009, and a 6.8% drop in passenger traffic in the first seven months of 2009, compared to 2008.

Even though the IATA estimates demand for transportation will increase again, the Association predicts that airline earnings will not follow suit. The airline fare cuts led to an increase in the number of passengers, without improving revenues. The IATA warned that the coming months will be plagued by uncertainties, including the one about the price of oil. The latter currently has the airline industry extremely concerned, because an uncontrolled growth in oil prices, paired with the dwindling earnings could mean a difficult winter for airline companies.