Gloom envelops Airline meeting

KUALA LUMPUR, MALAYSIA —  The telltale signs of an industry in crisis were unavoidable at the biggest airline trade group’s yearly gathering: Attendance down by more than a third. Lavish sit-down meal service replaced by buffet tables. No golf outings on the agenda.

A record number of reporters showed up for the two-day conference, many repeatedly asking executives which carrier would be next to go under or be acquired.

One of the highlights of the event: a panel on whether aviation could ever be economically sustainable. (The consensus: Maybe, but only after further painful consolidation.)

The 65th annual meeting of the International Air Transport Assn. kicked off Monday in what many airline executives described as the worst business environment they had ever seen. Last week’s Air France crash only added to the gloom.

Since last year’s conference in Istanbul, Turkey, 20 carriers have filed for bankruptcy protection or shut down after being pummeled first by high fuel costs and then by a recession-induced travel slump made worse by an outbreak of swine flu.

“We’ve never seen anything like this before,” Jong Hee Lee, president of Korean Air Lines Co. and a 40-year veteran of the carrier, said of the travel slump that had hammered the industry. “Everybody is saying, ‘Let’s survive.’ ”

The association’s 226 member airlines, including the largest U.S. carriers -- Delta, American and United -- account for about 93% of the world’s international traffic. No event draws as many airline chief executives, estimated at 150 at this year’s meeting.

In one of the conference’s more depressing moments, the group’s CEO announced Monday that the industry would lose $9 billion this year, more than double the forecast made just two months ago.

Revenue is projected to tumble 15% to $448 billion, a drop more than twice as big as the falloff in sales after the Sept. 11, 2001, terrorist attacks.

And airline executives say there’s little relief in sight.

“What makes this crisis different is the global nature of it,” Air New Zealand Ltd. CEO Rob Fyfe said. “All regions of the world are being affected, and there is no place to hide.”

A recovery may not begin until next year, he added.

“Whenever we find the floor of this is one thing,” Fyfe said. “The question is how long we sit there before we begin to see any improvement.”

The conference was mobbed by reporters -- about 200 registered for the event, outnumbering airline CEOs, who often were swarmed as soon as they appeared in the hotel foyer, much like celebrities spotted coming out of restaurants.

The media frenzy may have been fueled by the industry’s woes.

For many airlines, demand has been falling faster than cuts in capacity, prompting major fare sales that have benefited travelers but destroyed the bottom line.

“It’s certainly much more somber than anything I’ve ever experienced before,” British Airways CEO Willie Walsh said of the gathering.

The disappearance of Air France Flight 447 over the Atlantic Ocean last week with 228 passengers on board cast a long shadow over the event.

There has been speculation that an automated navigation system aboard the Airbus A330 malfunctioned as it did in two incidents last fall involving A330 planes operated by Qantas Airways Ltd. One of the Qantas planes dipped suddenly twice, injuring more than 70 passengers.

But several airline executives defended the Airbus A330 jetliner.

“It’s a safe plane, it’s a good plane,” Chew Choon Seng, CEO of Singapore Airlines, which operates four A330s and has ordered 16 more, told Reuters. “We should not jump to conclusions.”

John Leahy, chief operating officer at Airbus, declined to comment on any aspect of the investigation into the plane’s disappearance.

“One thing we have to do is not to be speculating about this accident at this juncture,” he said. “This is really up to the accident investigators to get to the bottom of this thing as quickly as they can.”

Qantas CEO Alan Joyce said he had been assured by Airbus that there was no connection between the problems it had with the navigation equipment and the Air France crash.

“Airbus is telling us that it’s absolutely not” related, Joyce said. “I can certainly say for Qantas that we have complete confidence in the aircraft.”

The airline association’s conference generally attracts executives of carriers that fly many international flights, not low-cost carriers focused on their domestic markets. So it was a bit of a surprise that JetBlue Airways Corp. CEO Dave Barger showed up.

Known for its loyal following at Long Beach Airport, JetBlue offers some flights to the Caribbean and Latin America from New York and Fort Lauderdale, Fla. But next week the airline will begin flying out of Los Angeles International Airport, a move that could portend the introduction of service from LAX to Latin America and Canada.

“The entry into LAX is interesting because it gives us an opportunity to also take a look at a route system internationally from Southern California,” Barger said. “What works for us on the East Coast could work for us out on the West Coast as well.”

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peter.pae@latimes.com