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World News

April 20, 2010

Airline losses from ash climb over $1 billion

PARIS (AP) — Airline losses from the volcanic ash cloud climbed above $1 billion Monday, and the industry demanded compensation from the European Union as officials agreed to let flights resume on a limited basis.

Airlines are losing as much as $300 million per day, with European companies like British Airways suffering the most. An umbrella group for the airline industry criticized European leaders' handling of the disruption, which has grounded thousands of flights to and from Europe for the past five days.

"It's embarrassing, and a European mess," said Giovanni Bisignani, chief executive of the International Air Transport Association. The group complained that it saw "no leadership" from government officials.

"It took five days to organize a conference call with the ministers of transport, and we are losing $200 million per day (and) 750,000 passengers are stranded all over. Does it make sense?" Bisignani said.

Air transport officials said losses could run as high as $300 million a day, although most analysts expect the effect on U.S. airlines will be limited.

The disruptions caused by the ash cloud happened just as airlines were seeing demand pick up, particularly in the more lucrative business travel segment. Last year, the recession suppressed both leisure and business travel, causing the industry to lose an estimated $9.4 billion, according to the IATA.

British Airways said airlines have asked the EU for financial compensation for the closure of airspace, which began last Wednesday. BA's London hub was among the first airports shut down.

"This is an unprecedented situation that is having a huge impact on customers and airlines alike," said BA Chief Executive Willie Walsh. "We continue to offer as much support as we can to our customers. However, these are extraordinary circumstances that are beyond all airlines' control."

The airline industry has racked up $50 billion in losses over the last decade. The 9/11 attacks, epidemics of SARS and bird flu, increased security requirements, and the economic crisis have all been cited as causes for decreased revenues.

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