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Iata ups outlook for African airlines

Oct 01 2012 09:59 James-Brent Styan

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Cape Town – The International Air Transport Association (Iata) has upgraded its forecasts for industry profits for 2012.

Iata director general and CEO Tony Tyler said airline industry profits will be about $4.1bn in 2012. The earlier forecast was for $3bn.

“Last year the airlines made $8.4bn so we’re still in a tough spot, but at least the fall in profitability this year will not be as bad as we had previously expected.

“Even with this improvement, the 0.6% net profit margin that this will deliver is far from a sustainable return. The news today is good, but it is still a very tough business.”

Further good news for airlines in Africa is that the region's airlines is now expect to break even this year. Previously Iata was expecting a loss of $100m for African airlines.

“This means African airlines will be at around the same levels in 2011, when they also broke even.”

Tyler touched on the European Union’s emission trading scheme plans, and said governments need to consider implementing aviation-friendly policy.

“Aviation-friendly policies can propel economies forward in a very positive way. Singapore, China, Hong Kong are examples. And then you look to Europe.

"The region is among the most in need of the economic growth that aviation can provide. Yet we still see high taxes, cumbersome regulation and capacity constraints. There are lessons for Europe to learn from other parts of the world.”

Tyler also gave a forecast of the situation expected in 2013.

“Looking into 2013, the situation is expected to improve moderately. Most likely the external factors will not change dramatically.

"Fuel prices are forecast to soften very slightly to $105/barrel for Brent. This and recent government and central bank actions are expected to improve GDP (gross domestic product) growth from 2.1% to 2.5%.

"This combination will result in industry profits gaining ground to $7.5bn. But against anticipated revenues of $660bn, that will still be a 1.1% profit margin.”

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