Europe lags as IATA ups airline profits outlook

City A.M. Reporter
THE world’s airlines have raised their profit forecasts for 2012 and expect improved performance in 2013, the International Air Transport Association (IATA) said yesterday.

But Europe, mired in an ongoing debt crisis, is expected to suffer wider-than-expected losses of $1.2bn, IATA added.

Many firms will be helped by efforts by North American airlines to trim capacity, lifting margins, and demand in Asia that has held up despite a weak global economy.

IATA, which represents about 80 per cent of global carriers, now expects the $630bn (£389.6bn) airline industry to make a net profit of $4.1bn this year, up from an earlier forecast of $3bn but still less than half the $8.4bn achieved in 2011.

IATA also said in its first forecast for 2013 that industry profits will rise further next year to $7.5bn, helped by passenger traffic expansion of 4.5 per cent and cargo expansion of 2.4 per cent as global economic growth quickens to 2.5 per cent from an expected 2.1 per cent this year. Profit margins will remain razor-thin at 1.1 per cent in 2013 versus an expected 0.6 per cent in 2012, the association added.

“The outlook improvement is due to airlines performing better in a difficult environment,” Tony Tyler, IATA’s director general and chief executive said in a statement.

North American carriers are expected to boost profits to $1.9bn this year from $1.3bn in 2011, after extensive restructuring.

Asian profits of $2.3bn continue to drive most of the industry’s growth although they will be down from last year’s $5.3bn.