Short-term gain amid turbulent times, says IATA

Singapore: It is likely to be a case of short-term gain and continuing pain for the global airline industry, with profits for carriers slated to fall in 2012 after an unexpectedly strong performance so far this year.
The airline industry is set to record a net post-tax profit of $6.9 billion this year, up from $4 billion as per previous estimates, the International Air Transport Association (IATA) said here today.
But for 2012, IATA, which represents about 93 per cent of global air traffic, has projected overall profit to fall to $4.9 billion with a razor-thin net margin of just 0.8 per cent, even lower than this years’ estimated net margin of 1.2 per cent.
“The story for 2012 basically is that we will see slower growth in traffic and passenger yields. Costs will increase marginally faster than revenues and we face a tough year,” said IATA director general and CEO Tony Tyler.
A combination of stronger air travel volumes, despite the shocks in Japan and the Middle East as well as weak economic growth in developed markets, along with an increase in asset utilisation has buoyed the forecast for this year.
However, given the direct correlation between the financial performance of the airline industry and global economic growth, the ongoing situation in the developed, Western economies is likely to translate into “an extended period of sluggish growth and weak profits” for the sector, IATA said in a release, and warned that additional shocks could even put the sector in the red.
21/09/11 Devjyot Ghoshal /Business Standard

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Categories: Indian Aviation- In General Sep 2011