Air freight slump near bottom

ZURICH (Reuters) -- The slump in demand for air freight may have hit bottom, data from an airline industry body showed on Wednesday, but it warned there were no signs that a recovery was around the corner.

Air cargo demand tumbled 21.7% in April, the fifth consecutive month of a drop of more than 20%, but the pace of decline held steady, indicating that the worst of the downturn could be in the past, the International Air Transport Association (IATA) said.

"Freight remains at shockingly low levels. The worst may be over. However, we have not yet seen any signs that recovery is imminent," IATA Director General and Chief Executive Giovanni Bisignani said in a statement.

Demand for air cargo, a key barometer for the health of global trade, has dwindled as retailers have stopped ordering new stock due to the slump in consumer spending, while manufacturers have also curbed their production of new goods.

Air freight volumes are likely "to bounce along the bottom" until inventories adjust to more normal levels, IATA said.

Earlier this month, Bisignani told Reuters it would be necessary to wait another three or four months before it would be possible to tell if the situation was improving.

IATA, which represents 230 airlines including British Airways, Cathay Pacific and United Airlines, and Emirates, said international air passengers numbers fell 3.1% year-on-year in April.

IATA said earlier this month that passenger travel was likely to fall further and the number of people flying business and first class had fallen sharply in March, depressing fares and hitting airlines' revenues.

Privately-owned airline Virgin Atlantic warned on Tuesday the tough economic environment would make it "almost impossible" for airlines to make a profit in the current year.

The group also reiterated recent comments from rival British Airways that a slump in passenger numbers worldwide showed no signs of abating, making the current climate the toughest the industry has faced.

IATA has forecast that carriers are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, after losses of around $8.5 billion last year.