Airline industry to post $6.9 bn profit: IATA

September 20th, 2011 - 5:06 pm ICT by IANS  

New Delhi, Sep 20 (IANS) The international airlines association Tuesday hiked the industry’s profit levels in the current year to $6.9 billion from the $4 billion it had projected earlier, as higher than anticipated passenger traffic is reported.

“Passenger demand has been stronger than anticipated. The forecast for the year stands at 5.9 percent growth, up from 4.4 percent projected in June,” the International Air Transport Association (IATA) said in a statement.

The statement said that steps like better asset utilisation allowed the airlines to manage the higher than expected traffic growth till now in the year which will eventually reach a cumulative 2.833 billion passengers.

“Airlines are going to make a little more money in 2011 than we thought. That is good news. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement,” said Tony Tyler, IATA’s director general and CEO.

According to Tyler, the profit margins of the industry are at 1.2 percent of the total revenue of $594 billion.

“The $2.9 billion bottom line improvement is equal to about a half a percent of revenue. And the margin is a paltry 1.2 percent. Airlines are competing in a very tough environment. And 2012 will be even more difficult,” said Tyler.

Meanwhile, IATA downgraded the industry’s profitability to $4.9 billion in 2012 on the total revenues of $632 billion at a net margin of just 0.8 percent.

“It looks like we are headed for another year in the doldrums. With business confidence declining, it is difficult to see any potential for significant profitable growth,” it said.

IATA’s forecast is based upon global projected GDP growth of 2.5 percent in 2011 and 2.4 percent in 2012.

“Airline financial performance is closely linked to the health of world economies. Whenever GDP growth has slowed below 2.0 percent, the airline industry has lost money,” the statement said.

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