Global airline profits for 2012 expected at $3 billion

June 12th, 2012 - 12:07 am ICT by IANS  

Beijing, June 11 (IANS) The International Air Transport Association (IATA) Monday forecast a dip in the global airline industry’s profits at $3 billion in 2012 from last year’s $7.9 billion.

This will be the second straight year decline in profits which peaked in 2010 at $15.8 billion with a net profit margin of 2.9 percent, the IATA said.

“The $3.0 billion industry profit forecast has not changed. But almost everything in the equation has,” said Tony Tyler, director general and chief executive, IATA.

“Demand has been better than expected, so far this year. And fuel prices are now lower than previously anticipated, but that’s on the expectation of economic weakness ahead.”

According to Tyler, the Eurozone crisis is standing in the way of improved profitability and that net profit margin for 2012 will be just 0.5 percent. Last year, net profit margins stood at 1.3 percent.

IATA further said that a fall in oil prices, and a stronger than expected growth in passenger traffic is being offset by the European sovereign debt crisis.

Sector-wise IATA said that Asia-Pacific based carriers are expected to make the largest contribution to industry profits at $2 billion.

“This ($2.0 billion) is less than half the $4.9 billion profit that the region delivered in 2011 and a quarter of the $8.0 billion achieved in 2010. The slowdown in the Chinese and Indian economies is another factor in the slow growth environment,” IATA said in a statement.

However, IATA said that regional demand is expected to grow at 3.9 percent in Asia.

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