The world’s airlines nudged up their profit forecasts for 2013, reflecting growing confidence in the global economy and the financial performance of airlines, the International Air Transport Association said on Wednesday.
The association, which represents about 80 per cent of global carriers, said it expects the $671 billion global airline industry to make a net profit of $10.6 billion this year, up from an earlier forecast of $8.4 billion, and well above the $7.6 billion achieved in 2012.
“Against a backdrop of improved optimism for global economic prospects, passenger demand has been strong and cargo markets are starting to grow again,” said Tony Tyler, IATA’s director general and chief executive.
IATA cautioned that the Eurozone risked a renewed crisis from the situation in Cyprus, and that its forecast was based on the Eurozone remaining stable. The association noted that airline stocks have climbed seven per cent so far in 2013, despite a five per cent rise in the price of jet fuel.
Rising revenue and better margins are driving higher profits, it said. Revenue is forecast to hit $671 billion this year, compared with the prior forecast of $659 billion. Margins are expected to widen slightly, to 1.6 per cent after tax, compared with the prior forecast of 1.3 per cent, but they remain slender.
Passenger traffic is forecast to rise by 5.4 per cent compared with an earlier forecast of 4.5 per cent, while cargo activity – a sensitive barometer of world trade — is forecast rising 2.7 per cent, compared with a forecast of 1.4 per cent previously.