Home » Aviation, Breaking News » IATA upgrades airline profit outlook

The global airline industry will see US$12.7 billion profit in 2013 on $711 billion in revenues, up from the $10.6 billion profit forecast in March 2013 and the $7.6 billion profit generated in 2012, according to the International Air Transport Association (IATA).

The net profit margin of 1.8 percent indicates the razor-thin profits of the airline industry, but even this small margin will make 2013 the third strongest year for airlines since the events of 2001, said IATA.

“This is a very tough business. The day-to-day challenges of keeping revenues ahead of costs remain monumental,” said Tony Tyler, IATA’s director general and CEO.

But the cargo business will continue to suffer from the weak outlook in developed economies. Freight volumes are expected to reach 52.1 million tonnes. After a 6.3 percent fall in yields in 2012, IATA expects volumes to further contract by 2 percent in 2013 “as capacity conditions remain much more challenging than in passenger markets.”

On a regional basis, all regions are expected to report a profit in 2013, with some being stronger than others. “Overall, a trend is emerging that sees strengthening profitability among larger or niche airlines. The profitability of many smaller airlines—without the scale economies, market diversification or niche markets—faces greater challenges from high fuel prices and weak economic performance.”

Asia-Pacific airlines are expected to post a combined profit of $4.6 billion in 2013, up from the previous projection of $4.2 billion, to lead all regions both in absolute profits and earnings before interest and taxes margin.

North American airlines are expected to deliver a $4.4 billion profit, significantly up from the $3.6 billion projected previously.

European airlines are expected to report profits of $1.6 billion, double the previous projection of $0.8 billion.

Middle East carriers are expected to show a profit of $1.5 billion, slightly improved from the previous projection of $1.4 billion.

Latin American airlines are expected to post a $0.6 billion profit, unchanged from the previous forecast.

African airlines continue to be the weakest performers, with passenger load factors below 70 percent, operating margins averaging less than 1 percent, and profits of just $100 million.

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