Airline body raises global profit forecasts for the next two years

City A.M. Reporter
AIRLINES lobby group Iata has raised its forecast for airline profits this year by 10 per cent and predicted passenger numbers topping 3bn for the first time, reflecting lower jet fuel costs, improved efficiency and global economic growth.

The International Air Transport Association (Iata) said yesterday it expected total airline profits to reach $12.9bn (£7.8bn) this year, having only three months ago cut its forecast to a total of $11.7bn.

In projections which are closely watched for a barometer of the sector’s health, the body also predicted profits growing to $16.4bn in 2014, though it said cargo demand remained stagnant.

Profit per passenger is expected to leap to $4.13 in 2013 from $2.49 in 2012, then reach an average $5.94 in 2014, said Iata. But without revenue from ancillary services such as lounge access, priority lanes at airports and pre-approved cabin baggage, the industry would be in the red. Ancillary revenue is forecast at about $13 per passenger.

Improved efficiency means airlines are expected to use a record 81 per cent of available passenger capacity in 2014. But they will struggle to use extra cargo capacity that comes with flying more planes. Cargo demand is also suffering from increased trade protectionism and a rise in costs in formerly low-wage manufacturing countries.