22-Sep-2010 11:26 AM

IATA raises FY2010 profit forecast, Europe to remain in the red

IATA raised (21-Sep-2010) its profit forecast for the global airline industry in FY2010 to USD8.9 billion, up from its Jun-2010 forecast of USD2.5 billion in net profit on revenue of USD545 billion, as the cyclical upturn in traffic and yields exceed expectations. However, IATA is forecasting growth will slow in 2011, which is likely to coincide with increasing capacity as new aircraft deliveries rise and fleet utilisation recovers. The trade association expects profit in FY2011 to slip to USD5.3 billion as load factor and yields come under downward pressure. IATA expects the Asia Pacific region to lead in terms of profits in FY2010 and FY2011. Details includes:

  • FY2010 forecast:
    • Revenue: USD560 billion, +15.9% year-on-year;
    • Costs: USD539 billion, +11.4%;
    • Operating profit: USD20.6 billion, compared with a loss of USD1.2 billion in p-c-p;
    • Net profit (loss): USD8.9 billion, compared with a loss of USD9.9 billion in p-c-p;
      • Asia Pacific: USD5.2 billion, compared with a loss of USD2.7 billion in p-c-p;
      • North America: USD3.5 billion, compared with a loss of USD2.7 billion in p-c-p;
      • Latin America: USD1.0 billion, +100%;
      • Middle East: USD400 million, compared with a loss of USD600 million in p-c-p;
      • Africa: USD100 million, compared with a loss of USD100 million in p-c-p;
      • Europe: (USD1.3 billion), compared with a loss of USD4.3 billion in p-c-p;
    • Passenger numbers: 2,395 million, +7.5%;
    • Passenger yield: n/a, +7.3%;
    • Cargo volume: 44.2 million tonnes, +19.8%;
    • Cargo yield: n/a, +7.9%;
    • Breakeven load factor: 63.2%;
  • FY2011 forecast:
    • Revenue: USD591 billion, +5.5%;
    • Costs: USD575 billion, +6.6%;
    • Operating profit: USD15.4 billion;
    • Net profit: USD5.3 billion;
      • Asia Pacific: USD3.0 billion;
      • North America: USD1.4 billion;
      • Latin America: USD600 million;
      • Middle East: USD300 million;
      • Europe: Breakeven;
      • Africa: Breakeven;
    • Passenger numbers: 2,508 million, +4.9%;
    • Passenger yield: n/a, stable;
    • Cargo volume: 46.4 million tonnes, +5.3%;
    • Cargo yield: n/a, stable;
    • Breakeven load factor: 63.3%. [more]

IATA: “The real question in this forecast is how long we see the recovery lasting. It is clear that there will be a slowdown in the fourth quarter. We are already seeing that in our traffic. 2010 is as good as it gets. It will be the peak of this cycle. 2011 will be a much tougher year … it is critical that this industry has the commercial freedom to merge and consolidate where it makes business sense.  That is the only way that we can get the margins to normal levels of profitability and be in a position to fund growth and our environmental projects,” Giovanni Bisignani, CEO and Director General. Source: IATA, 21-Sep-2010.

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