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Iata: Global airline profits to rise

Dec 13 2012 12:49 James-Brent Styan

AP

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Cape Town - Airlines are expected to make a total net profit of $6.7bn in 2012, according to the International Air Transport Association's (Iata's) latest forecast on the global profitability of the industry as a whole.

Iata chief economist Brian Pearce said the association expects this number to increase to $8.4bn in 2014.

“The problem, however, is that margins remain very weak. For 2012 it will be around the 1% mark and next year we expect 1.3%.”

Pearce said airlines exposed to cargo are having an especially rough ride in current economic conditions.

“Cargo planes are flying around half empty. Many freighters are actually grounded. It’s very hard to do cargo business profitably at the moment,” he said.

Pearce said airfreight has been in decline over the past two years.

“There is some good news in this regard. We’ve seen the US economy pick up recently and that should create a floor which may help to see some growth in the cargo area next year,” he said.

Asia Pacific carriers are expected to be the best off, with an anticipated total profit of $3bn for 2012.

These airlines are closely followed by North American carriers, expected to report profits of $2.4bn.

Iata expects African airlines to break even in 2012. This remains unchanged from 2011.

The industry body said while the continent is expanding rapidly, its carriers are suffering from strong competition on long haul routes, high cost structures and a regulatory regime that inhibits the development of intra-Africa links.

 - Fin24

Follow James-Brent Styan on Twitter at @jamesstyan.

 

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