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IATA reverses forecast of $2.8-billion airline loss to $2.5-billion profit in 2010

08 June 2010 11:44 (UTC +04:00)

Baku â€“ APA-Economics. Global aviation is bouncing back from bleeding $2.8 billion in 2009 to posting $2.5 billion earnings this year although Europe will still be in the red because of strikes, natural disasters and a currency crisis, according to the International Air Transport Association (IATA), Manila Bulletin reported.

Reversing its forecast three months ago that airlines will lose $2.8 billion in 2010, IATA now expects the industry will haul in $545 billion for the year, up from $483 billion in 2009, but still below the $564 billion achieved in 2008.

â€œThe global economy is recovering from the financial crisis much more quickly,â€ Giovanni Bisignani, IATAâ€™s Director General and CEO declared. â€œAirlines are benefiting from a strong traffic rebound. We thought that it would take at least three years to recover the $81 billion (14.3%) drop in revenues in 2009. But the $62 billion top line improvement this year puts us about 75% on the way to pre-crisis levels.â€

However, â€œThe $2.5-billion profit comes with some important health warnings,â€ he cautioned. â€œFirst, this represents a net margin of just 0.5%, which is a long way from sustainable profitability. Second, a major part of the global industry is still posting big losses. A stagnating economy, strikes, natural disasters and a currency crisis have left European carriers struggling with an anticipated $2.8-billion loss.â€

According to IATAâ€™s revised forecast, passenger traffic will grow by 7.1% in 2010 while cargo traffic will expand by 18.5%. This is better than the previous forecast growth of 5.6% and 12.0% respectively.

Over the first quarter, the industry was growing at an annualized rate of 9% for passenger and 26% for cargo. â€œMuch of the cargo growth is associated with inventory re-stocking. As this cycle completes with normal inventory to sales ratios, we are expecting moderate growth driven by consumer spending,â€ Bisignani noted.

Yields are now expected to grow by 4.5% for both the cargo and passenger business. This is a significant improvement from the previously forecast yield growth of 2.0% in passenger markets and 3.1% for cargo. The 4.5% rate is just ahead of consumer price inflation and is contributing to the 13% rise in revenues forecast for 2010. Despite the increase, revenues remain 4% below their 2008 peak.