IATA further downgrades 2011 industry profit outlook to USD4bn

IATA has again downgraded (06-Jun-2011) its 2011 airline industry profit forecast from its Mar-2011 forecast of USD8.6 billion to USD4 billion on expected revenues of USD598 billion with IATA Director General and CEO Giovanni Bisignani citing the "natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices" for the slashed profit outlook. Details include:

• Fuel: Industry fuel bill is revised upwardly by USD10 billion to USD176 billion with the average oil price expected to reach USD110 per barrel (Brent), +15% from its previous forecast of USD96 per barrel;
• Demand:
  • Passenger demand: Revised downwardly from 5.6% growth rate to +4.4%;
  • Cargo demand: Revised downwardly from 6.1% growth rate to +5.5%;
• Capacity: Revised upwardly from overall capacity growth of 4.7% to +5.8%;
• Yields:
  • Passenger yield: Revised upwardly from a 1.5% growth rate to +3%;
  • Cargo yield: Revised upwardly from a 1.9% growth rate to +4%;
• Profit (loss): Revised downwardly from USD8.6 billion to USD4 billion;
  • Asia Pacific: USD2.1 billion;
  • North America: USD1.2 billion;
  • Europe: USD500 million;
  • Middle East: USD100 million;
  • Latin America: USD100 million;
  • Africa: (USD100 million). [more]

IATA: "Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations to USD4 billion this year. That we are making any money at all in a year with this combination of unprecedented shocks is a result of a very fragile balance. The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel. But with a dismal 0.7% margin, there is little buffer left against further shocks," Giovanni Bisignani, Director General and CEO. Source: IATA, 06-Jun-2011.