Bruce Barnard | Jun 06, 2011 8:50AM EDT
The International Air Transport Association scaled back its 2011 industry profit forecast by more than half on Monday, to $4 billion from an estimated $8.4 billion the industry group had projected just three months ago.
“Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations,” said Giovanni Bisignani, IATA’s outgoing director general.
The $4 billion collective profit forecast for 2011 compares with an estimated $18 billion profit booked by IATA’s 238 member airlines in 2010.
IATA cut its 2011 growth forecast for cargo to 5.5 percent from 6.1 percent, but upped its yield growth forecast to 4 percent from 1.9 percent, saying robust economic conditions have allowed carriers to partially recover higher fuel prices.
Bisignani said the projected 2011 profit margin will shrink to 0.7 percent on forecast revenue of $598 billion, compared with what he called last year’s “pathetic” 3.2 percent on revenues of
$562 billion.
IATA singled out higher fuel prices as the key reason for its lower profit forecast. It is estimating an average oil price for $110 per barrel for North Sea Brent, a 15 percent increase on its previous forecast of $96 per barrel.
-- Contact Bruce Barnard at brucebarndard47@hotmail.com.
