2010 recovery as good as it gets

THE International Air Transport Association (IATA) is now projecting a profit of US$8.9 billion (up from the $2.5 billion forecast in June). However, it also predicts this will drop to $5.3 billion in 2011.

While all regions except Africa showed improved prospects compared to the previous forecast, sharp differences remain, with Asia-Pacific being the strongest recovery and Europe the weakest.

However, looking ahead to 2011, the industry forecast looks weaker. The impact of the post-recession bounce from re-stocked inventories will dissipate. Consumer spending is not expected to pick-up the slack as joblessness remains high and consumer confidence falls in Europe and North America. Freight markets will remain stronger in regions such as Asia, the Middle East and South America but these hot spots are not expected to be able to sustain global growth in 2011.

“[2010] is as good as it gets for this cycle,” said Bisignani. “Governments are running out of cash for pump priming. Unemployment remains high and business confidence is weakening. And we expect the 3.2 per cent GDP growth of 2010 to drop to 2.6 per cent in 2011. As a result, 2011 is looking more austere. We see profitability falling to $5.3 billion with a margin of 0.9 per cent.”

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