Airlines group lifts 2012 profit outlook for industry to $4.1billion from $3 billion
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The outlook for the airline industry is improving, with profits expected to reach $4.1 billion this year and $7.5 billion in 2013, the International Air Transport Association said Monday.
The industry group raised its forecast for 2012 from $3 billion, saying passenger numbers so far this year were robust.
“Airlines are keeping their heads above water better than we expected,” IATA Chief Executive Tony Tyler told reporters.
{{#rendered}} {{/rendered}}But he noted that profits this year will still be less than half the $8.4 billion that the industry earned in 2011.
Tyler blamed Europe’s economic crisis, oil prices averaging $110 a barrel, weak cargo demand and low business confidence for the slowdown.
A profit of $4.1 billion on industry revenues of $636 billion equates to a margin of just 0.6 percent, Tyler noted.
{{#rendered}} {{/rendered}}Europe’s airlines are expected to record a loss of $1.2 billion this year due to the eurozone financial crisis and high taxation, IATA said.
It projected a $2.3 billion profit for companies in the Asia-Pacific region, despite a modest slowdown in the Chinese economy.
“Chinese domestic demand is still growing at nearly 10 percent and the demand for regional and long-haul travel, including in the premium classes, has held up better than expected in the face of economic uncertainty,” said Tyler.
{{#rendered}} {{/rendered}}The greatest improvement is seen for North American carriers, where IATA raised its profit forecast by $500 million to $1.9 billion, thanks to cost savings.
Middle East and Latin American airlines are also expected to post a profit, while African carriers will break even, said IATA
Tyler said the situation was likely to improve in 2013 as average oil prices ease to $105 per barrel, and government and central bank measures push global GDP growth to 2.5 percent from 2.1 percent this year.
{{#rendered}} {{/rendered}}The projected profits of $7.5 billion next year equate to a margin of 1.1 percent on revenues of $660 billion, IATA said.
The group represents some 240 of the biggest international airlines worldwide.