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Airline profitability prospects improve but profit margins remain anaemic

Analysis

Airline profitability prospects have improved for 2012, with IATA upwardly revising its 2012 financial forecast on 01-Oct-2012, predicting a USD4.1 billion profit compared to USD3 billion forecast in Jun-2012.

However, IATA director general and CEO Tony Tyler cautioned that "we should not get too excited" about the revision, with profits still to be less than half the USD8.4 billion earned in 2011 and considerably lower than the USD19.2 billion achieved in 2010. A return to those levels is not anticipated any time in the near future.

Despite the upward revision, profit margins also remain anaemic, with Mr Tyler noting that the revision only increased net profit margins from 0.5% to a still "miniscule" 0.6%.

Airline industry profitability is expected to pick up modestly to USD7.5 billion in 2013, amid slightly faster growth, lower oil prices combined and an upwardly revised GDP forecast.

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