Industry profit margins pathetic says IATA

REVISED estimates for the industry’s overall performance for 2010 suggest a net profit of US$15.1 billion. This is almost double the International Air Transport Association’s (IATA) forecast of $8.9 billion in September.

IATA also modified its projections for the industry’s profit in 2011 from $5.3 billion forecast in September to $9.1 billion.

However, profit margins are still poor at 2.7 per cent for 2010 and down to 1.5 per cent in 2011.

“Our profit projections increased for both 2010 and 2011 based on an exceptionally strong third quarter performance,” said Giovanni Bisignani (right), IATA’s chief executive officer. “But despite higher profit projections, we still see the recovery pausing next year after a strong post-recession rebound. The two-speed nature of the recovery is unchanged with European airlines continuing to under perform other regions.”

Bisignani described the margins as “pathetic” and the industry “balancing on a knife-edge”.

Focusing on cargo, IATA is less confident predicting demand to grow by 18.5 per cent compared with the previously forecast 19.8 per cent. This will limit yield growth to seven per cent, down from the previously forecast 7.9 per cent.

In 2011, IATA suggests cargo demand will grow by 5.5 per cent, 0.2 per cent more than predicted in September. Cargo yields are expected to remain flat, unchanged from the previous forecast. 

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