Airlines set for higher profits

THE WORLD’S airlines are set to make an $8.9bn (£5.7bn) profit this year, according to sharply revised figures from the International Air Transport Association (IATA).

Stronger-than-expected recovery within the commercial aviation sector has pushed the leading industry body to up its profits forecast for 2010 from June, when it said the sector would post just $2.5bn in profits for the year.

“The industry recovery has been stronger and faster than anyone predicted. The profit we are projecting will start to recoup the nearly $50bn lost over the previous decade,” said IATA chief executive and director general, Giovanni Bisignani.

But in its first forecast for 2011, IATA said it expects profits to fall to $5.3bn as lingering doubts remain over how long the recovery will last.

The world’s airlines are expected to post collective revenue of $560bn for the year, marking a $15bn increase on what was previously forecasted.

Meanwhile, Asia-Pacific airlines continue to outpace competitors and are expected to post profits of $5.2bn as a result of a surge in business travel in the region and a 23.5 per cent increase in passenger traffic.

According to IATA, European carriers are expected to improve 2010 losses to $1.3bn from the $2.8bn the industry body forecast in June.

Bisignani said: “There are lingering doubts over how long this cyclical upturn will last. Even if it is sustainable, the profit margins that we operate on are razor thin.”