IATA – Airlines Will Earn $4.1 Billion In 2012

Airlines are expected to earn $4.1 billion in 2012, up by 27 per cent from the $3.0 billion forecast in June.

The International Air Transport Association (IATA) announced an upward revision to its global aviation outlook for 2012.

The fall in airline profits from the $8.4 billion that the industry earned in 2011 will be cushioned by improved airline performance.

Airlines are expected to earn $4.1 billion in 2012, up by 27 per cent from the $3.0 billion forecast in June.

The revision will still see the industry’s net profit margins fall from the 1.4 per cent realised in 2011 to 0.6 per cent (up from the previously forecast 0.5 per cent).

In a first look at 2013, the association sees global profits rising modestly to $7.5 billion, though this is a net margin of just 1.1 per cent.

“The European sovereign debt crisis lingers on. China continues to moderate its growth. And the impact of recent quantitative easing in Japan and the US will take time to yield growth. While some of these risks have diminished slightly over recent months, they continue to take their toll on business confidence. The outlook improvement is due to airlines performing better in a difficult environment,” said Tony Tyler, IATA’s Director General and CEO

“Improved airline performance was evident in second quarter results, which showed operating profits close to those of the previous year, following a tough first quarter. The evidence is showing that consolidation is producing positive results. Asset utilisation in the passenger segment is high across many markets.

“Even six years ago, generating a profit with oil at $110/barrel (Brent) would have been unthinkable. The industry has re-shaped itself to cope by investing in new fleets and adopting more efficient processes,” said Tyler.

Globally, aviation supports some 57 million jobs and $2.2 trillion in economic activity.