21-Mar-2012 9:38 AM

IATA downgrades 2012 net profit on rising fuel, Asia carriers to post largest profits

IATA downgraded (20-Mar-2012) its net profit forecast for the global airline industry from USD3.5 billion to USD3.0 billion for the full year 2012 due to the sharp rise in fuel prices since its Dec-2011 forecast, but noted the downgrade would have been larger if not for the improvements in macro-economic conditions. The industry group also expects load factors to marginally improve in 2012, supporting yields and unit revenues. Details include:

  • FY2011 estimates:
    • Revenue: USD598,000 million, +9.3%;
      • Passenger: USD468,000 million, +10.1%;
      • Cargo: USD69,000 million, +4.5%;
    • Costs: USD582,000 million, +10.9%;
      • Fuel: USD177,000 million, +27.3%;
    • Operating profit: USD16,200 million, -25.3%;
    • Net profit: USD7900 million, -50%;
    • Scheduled passenger numbers: 2835 million, +5.7%;
    • Passenger load factor: 78.1%, -0.3 ppt;
    • Cargo volume: 47.6 million tonnes, -0.8%;
    • Passenger yield: +4.0%;
    • Cargo yield: +5.5%;
  • FY2012 forecast:
    • Revenue: USD633,000 million, +5.9% when compared to 2011 estimates;
      • Passenger: USD498,000 million, +6.4%;
      • Cargo: USD72,000 million, +4.3%;
    • Costs: USD625,000 million, +7.5%;
      • Fuel: USD213,000 million, +20.3%;
    • Operating profit: USD8200 million, -49.4%;
    • Net profit (loss): USD3000 million, -62.0% compared to 2011 estimates;
      • North America: USD900 million, -18.2%;
      • Europe: (USD600 million), compared to a profit of USD700 million in p-c-p;
      • Asia Pacific: USD2300 million, -52.1%;
      • Middle East: USD500 million, -50.0%;
      • Latin America: USD100 million, -66.7%;
      • Africa: (USD100 million), compared to breakeven in p-c-p;
    • Scheduled passenger numbers: 2948 million, +4.0%;
    • Passenger load factor: 78.7%, +0.6 ppt;
    • Cargo volume: 48.6 million tonnes, +2.1%;
    • Passenger yield: +2.0%;
    • Cargo yield: +2.0%. [more – IATA Press Release] [more – Tony Tyler Speech]

IATA: “In December we saw the major risk facing the outlook to airline profitability as coming from the sovereign debt crisis in the euro-zone. Liquidity from the European Central Bank and a second Greek bailout has not resolved this problem, but has probably pushed this risk beyond 2012. However, sharply rising oil prices have replaced Eurozone debt as the major downside risk in 2012. We have already revised up our central forecast for oil prices to USD115/b. However, a number of commentators have pointed to a scenario where an escalation of the crisis in Iran, with the closure of the Straits of Hormuz, pushes oil prices to USD150/b in the second half of the year. That would mean an average of USD135/b for 2012.” Source: Company statement, 20-Mar-2012.

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