IATA Raises Forecast for Airline Profits

IATA Raises Forecast for Airline Profits

Global airline profits are set to improve this year, driven by a return to growth in cargo traffic and better-than-expected passenger figures, the International Air Transport Association said.

The industry body, which represents 80 percent of the world’s airlines, raised its 2013 net profit forecast to $10.6 billion, up from a previous estimate of $8.4 billion in December and sharply higher than its estimate of a $7.6 billion profit in 2012.

Revenue is projected to hit $671 billion, up $12 billion from the December forecast, while costs are expected to grow by $9 billion to $10 billion, mostly because of higher fuel bills.

“Industry profits are taking a small step in the right direction,” IATA Director-General and CEO Tony Tyler said. ”Against a backdrop of improved optimism for global economic prospects, passenger demand has been strong and cargo markets are starting to grow again.”

Cargo demand is expected to grow 2.7 percent in 2013, reversing the declining trend of the past two years, and cargo yields are forecast to be flat, an improvement on the 1.5 percent decline previously projected.

Asia-Pacific carriers are expected to post the biggest contribution to the improved industry performance with a $4.2 billion net profit, up from $3.2 billion previously forecast and the $3.9 billion reported in 2012. The region’s airlines, which account for 40 percent of the global freight market, will be the biggest beneficiaries of the cargo upturn with demand growth of 4.9 percent, slightly outpaced by a 5 percent increase in capacity.

North American airlines are expected to post a combined $3.6 billion profit, compared with $3.4 billion previously projected and the $2.3 billion posted in 2012.

European carriers are set for an $800 million profit, up from breakeven in the December forecast and a $300 million profit in 2012.