IATA says airline industry on the road to recovery

by Emily DUNBAR on December 15, 2010

The world’s airlines are expected to return from the profit slump this year and higher levels have been predicted for next year as well, said industry body IATA on Thursday.

Despite margins remaining low and continued uncertainty in the sector’s recovery, the International Air Transport Association said that its latest financial forecast shows that profits will return. As European airlines continue to underperform, the industry has held its breath on forecasts as unsteady conditions continue to persist.

However, IATA director-general Giovanni Bisignani said that profit projections for 2010-2011 show that this quarter’s exceptionally strong performance could continue as a trend through next year. Mr Bisignani added that despite high profit projections, recovery could still stall next year after a strong post-recession comeback.

Across the board, analysts have predicted ‘tough trading conditions’ for the airline industry, but outlooks have remained positive. IATA, which represents 230 airlines and covers 93 per cent of international traffic, doubled its estimates for next year after a huge rise in revenue in September.

It now forecasts that net profit for 2010 will come in at $15.1 billion, against a forecast of $8.9 billion in September. Net profit for 2011 has been logged as $9.1 billion, whereas previously it had been forecasted at $5.3 billion.

However, both forecasts are up from last year, when the industry hemorrhaged $9.9 billion. The return to industry profit will come up against a revenues forecast of 598 billion for 2011.

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