Home » Aviation, Breaking News » IATA cuts 2011 air freight revenue forecast to $67B

The International Air Transport Association (IATA) projects freight revenue in 2011 to fall to $67 billion, down $5 billion compared to the June forecast, due to weaker cargo markets.

IATA slashed its full-year volume growth projection from 5.5 percent to 1.4 percent in 2011. Airlines are expected to carry 46.4 million tonnes of cargo, down from the previous forecast of 48.2 million. Air freight volumes reached their post-recession peak in May 2010, largely driven by re-stocking. July’s traffic was 4 percent lower than that level. “It appears unlikely that a revival in air freight will begin before 2012,” IATA said.

In Asia-Pacific in particular, the weak air cargo markets are disproportionately affecting airlines from this region owing to the larger share of cargo in airline revenues, IATA said. The shocks from the Japanese earthquake and tsunami continue to affect supply chains and cargo markets. A strong rebound is expected late in the year continuing into 2012.

For the airline industry in general, the association upgraded its forecast of profits for 2011 to $6.9 billion, up from $4 billion projected in June. But it warned that profits remain “exceptionally weak” at 1.2 percent net margin with total revenues of $594 billion, and that profits are likely to fall to $4.9 billion in 2012.

“Airlines are going to make a little more money in 2011 than we thought. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement,” said Tony Tyler, IATA director general and CEO.

“But we should keep the improvement in perspective. The $2.9 billion bottom line improvement is equal to about a half a percent of revenue. And the margin is a paltry 1.2 percent. Airlines are competing in a very tough environment. And 2012 will be even more difficult,” he added.

The overall industry outlook grows weaker in 2012, said IATA. Debt-burdened Western economies look set for an extended period of weak economic growth—or worse. While developing economies look to be in much better shape, the prospects for industry growth are limited because many transport linkages are with developed nations.

“The fourth quarter of 2011 and the first half of 2012 may well see the weakest point for air transport markets,” said IATA.

“It looks like we are headed for another year in the doldrums,” said Tyler. “Relatively stronger economic growth and some rebound in cargo will help Asia Pacific airlines to maintain their 2012 profits close to 2011 levels at $2.3 billion. The rest of the industry will see declining profitability. And the worst hit is expected to be Europe where the economic crisis means the industry is only expected to return a combined profit of $300 million. A long slow struggle lies ahead.”

 

Photo by LHOON


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