Carrier profit forecast cut, but Asia Pacific still leads in profitability

THE International Air Transport Association (IATA) predicts the world's major airlines will earn four and a half times less this year than they did last in net profit which is expected to hit US$4 billion against the $18 billion made last year, reports London's Financial Times.


But IATA also said the most profitable region would the Asia Pacific, with $2.1 billion in net profits, down from $10 billion in 2010. It said North American carriers would see last year's $4.1 billion profit fall to $1.2 billion while European carriers would make $500 million, down from $1.9 billion while Middle East airlines would see profits of $100 million from $900 million.


This is a far cry from IATA's $8.6 billion net profit prediction only three months ago, a fall in which was attributed to natural disasters, Arab strife, but mostly to the sharp rise in oil prices, which increased by $10 billion to $176 billion this year, according to departing director general Giovanni Bisignani.


Growth in passenger and cargo is now forecast to be 4.7 per cent, but capacity is expected to rise by 5.8 per cent, cutting aircraft utilisation.


Mr Bisignani also told the IATA annual meeting in Singapore that the airlines' collective profit margin would fall to 0.7 per cent on forecast revenues of $598 billion, compared with last year's "pathetic" 3.2 per cent on revenues of $562 billion.


"The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel. But with a dismal 0.7 per cent margin, there is little buffer left against further shocks," he said.


The global airline industry lost $9.9 billion in 2009, and has made a collective loss in every calendar year since 2001 with the exceptions of 2006, 2007 and 2010, according to IATA figures.
(Source:http://www.schednet.com)