Aviation’s forecasted loss flip flops to profits

FORECASTED profit for the global aviation industry has increased to US$2.5 billion in 2010. This is a complete turnaround from IATA’s previous forecast in March of a $2.8 billion loss.

Industry revenues are expected to be $545 billion for the calendar year. This is up from the $483 billion in 2009, but still below the $564 billion achieved in 2008.

Cargo traffic is now expected to expand by 18.5 per cent, compared to the previous forecast growth of 12.0 per cent respectively. Over the first quarter, cargo has grown 26 per cent, although much of the cargo growth is associated with inventory re-stocking. This should level off into moderate growth.

Yields for cargo is now forecast to grow by 4.5 per cent and load factor should work out to be 10.2 per cent.

“The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated,” understated Giovanni Bisignani, IATA’s chief executive officer.

“Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black. We thought that it would take at least three years to recover the $81 billion (14.3 per cent) drop in revenues in 2009. But the $62 billion top-line improvement this year puts us about 75 per cent on the way to pre-crisis levels.

“The $2.5 billion profit comes with some important health warnings. First, this represents a net margin of just 0.5 per cent, which is a long way from sustainable profitability. Second, a major part of the global industry is still posting big losses. A stagnating economy, strikes, natural disasters, and a currency crisis have left European carriers struggling with an anticipated $2.8 billion loss,” added Bisignani.