IATA revises its 2013 global industry outlook downwards

IATA has revised its 2013 global industry outlook downwards – to US$11.7 billion profits on revenues of $708 billion.
The report finds that, although airline performance continued to improve in the second quarter, this was at a slower pace than expected, with the previous projection (in June) of $12.7 billion.
This performance reflects the impact on demand of the oil price spike associated with the Syrian crisis and disappointing growth in several key emerging markets, says an IATA statement.
“Performance in 2013 is considerably better than the $7.4 billion net profit of 2012. The upward trend should continue into 2014 when airlines are expected to return a net profit of $16.4 billion. This would make 2014 the second strongest year this century after the record breaking $19.2 billion profit in 2010,” it adds.
Overall, the story is largely positive for the passenger business. “Profitability continues on an improving trajectory. But we have run into a few speed bumps.
“Cargo growth has not materialised. Emerging markets have slowed. And the oil price spike has had a dampening effect,” notes Tony Tyler, the association’s director general.
“We do see a more optimistic end to the year. And 2014 is shaping up to see profit more than double compared to 2012.”
Despite the overall positive signs, cargo markets remain in the doldrums. Growth of only 0.9 per cent is expected (down from the previously projected 1.5 per cent).
“The ability of airlines to match cargo capacity to demand is limited by the natural growth in belly capacity that occurs as airlines respond to passenger demand,” says Tyler.
“As a result of this mismatch, cargo yields are expected to fall by 4.9 per cent this year (deeper than the two per cent decline previously projected).”
Cargo revenues are expected to show an $8 billion decline to $59 billion from their peak in 2011. By comparison passenger revenues expanded by $68 billion to $565 billion over the same period.
The Outlook for 2014 shows that airlines are expected to see a significant boost next year, with profits of $16.4 billion on revenues totaling $743 billion. Rising business and consumer confidence levels should indicate an uptick in the global business cycle (2.7 per cent GDP growth is expected) – which has a direct impact on airline profitability.
“We expect slightly more robust passenger growth (5.8 per cent) and a significant improvement in cargo growth to 3.7 per cent. Yields, however, for both passenger and cargo markets are expected to continue to fall by 0.5 per cent and 2.1 per cent respectively,” says Tyler.
All regions will see improved profitability, but divergence in performance will remain.

Share this story
Facebook
Twitter
LinkedIn