The airline industry will post a US$2.5 billion profit this year, reversing two years of losses, the International Air Transport Association (IATA) said yesterday, scrapping an estimate for a US$2.8 billion deficit as the economy rebounds.
The profit would be the industry’s first since 2007 and only the third in a decade after previous results were afflicted by recession, terrorist attacks, epidemics and wars.
Europe is the only region that is still expected to lose money this year.
PHOTO: REUTERS
Prospects for carriers have improved in the past few months as economic growth in Asia and the US boosts demand for travel and capacity cuts imposed last year bolster ticket prices.
IATA had been predicting a loss as recently as March 11.
“The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated,” IATA chief executive officer Giovanni Bisignani said yesterday in a statement to the organization’s annual meeting in Berlin. “Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black.”
Collective revenue is forecast to total US$545 billion this year, up 13 percent from US$483 billion last year, when the industry lost about US$10 billion.
IATA said it would take two years instead of three for sales to recover to peak levels, given anticipated growth this year of 7 percent in Asia and 3.3 percent in the US.
Bisignani also said that yields, a measure that equates to average fares, will grow by 4.5 percent for both passenger and cargo businesses after falling 12 percent last year.
IATA, which represents 230 airlines carrying 93 percent of international traffic, estimates that jet fuel will represent 26 percent of operating costs this year, up from 23 percent last year. Brent crude oil will average US$79 a barrel, it estimates.
Despite the general recovery, European airlines will lose about US$2.8 billion this year, IATA said, US$600 million more than the March estimate.
This was after the eruption of Iceland’s Eyjafjallajokull volcano on April 14 closed airspace for six days and grounded 100,000 flights.
The event cost the industry US$1.8 billion, with US$1.26 billion of those losses in Europe.
Asia-Pacific carriers are expected to earn US$2.2 billion this year, up from the March forecast of US$900 million. The region lost US$2.7 billion last year.
In North America, airlines will probably post a profit of US$1.9 billion, IATA said, versus a prior prediction for a US$1.8 billion loss.
IATA’s projections are based on information from members, which don’t include discount airlines such as Southwest Airlines Inc, Ryanair Holdings PLC and EasyJet PLC.
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