The International Air Transport Association maintained its $3 billion global airline profit forecast for 2012 as oil prices fall, passenger traffic grows faster than expected and the cargo market bottoms out.
North American and Latin American airlines’ prospects have improved since the previous forecast in March but this has been offset by downgrades for Middle Eastern, Asia-Pacific and European carriers.
European airlines are now expected to lose $1.1 billion in 2012, nearly double the $600 million forecast in March, due to the eurozone crisis.
North American carriers are projected to post a combined profit of $1.4 billion this year, up from a March forecast of $900 million and a slight improvement on the $1.3 billion profit in 2011.
Asia-Pacific airlines are expected to post a profit of $2 billion in 2012, a $300 million drop from the March forecast.
“The $3 billion industry forecast has not changed. But almost everything else in the equation has,” said IATA Director General Tony Tyler.
“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. The eurozone crisis is standing in the way of improved profitability,” Tyler told IATA’s annual meeting in Beijing.
“The industry’s profitability is on a knife edge. If the bottom line worsens by even the equivalent of just 1 percent of revenue, our $3 billion forecast very quickly becomes a $3 billion loss.”
Cargo demand has bottomed out, following a sharp fall in 2011, in line with the moderate improvement in business confidence in a number of economies outside Europe, according to IATA.
The upturn is weak and narrowly based, however, with only Middle Eastern airlines seeing significant volume gains. European economic weakness is expected to limit any further improvement.
IATA forecast total air cargo volume of 47.8 million metric tons in 2012, virtually unchanged from the 47.7 million tonnes carried in 2011.
Airlines earned a record $15.8 billion in 2010, representing a net profit margin of 2.9 percent, falling to $7.9 billion and a 1.3 percent margin, in 2011.
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