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IATA sees weaker 2011 for airlines

THE International Air Transport Association (IATA) expects a weaker 2011 with the recent strong growth in travel and freight markets in the Asia-Pacific region unlikely to be sustainable.

“2010 is as good as it gets for this cycle. Governments are running out of cash for pump priming. Unemployment remains high and business confidence is weakening. And we expect the 3.2% GDP growth of 2010 to drop to 2.6% in 2011,” IATA director general Giovanni Bisignani said.

“As a result, 2011 is looking more austere. We see profitability falling to $5.3 billion with a margin of 0.9%,” he added.

Bisignani said industry growth is expected to fall back to 5% in line with the historical trend. But a surge of aircraft deliveries of some 1,400 units will fuel capacity expansion of 6% more than the projected demand improvement.

For 2010, IATA has revised its industry outlook and predicted an $8.9-billion industry profit, so much higher than the $2.5-billion forecast in June.

Asia-Pacific carriers are expected to post a $5.2 billion profit in 2010. This is better than the $3 billion recorded during the previous peak in 2007 and double the previously forecast $2.2 billion for this year. The strong improvement is based on strong market growth and yield gains.

North American carriers are now forecast to make $3.5 billion, up from $1.9 billion. US airlines cut capacity significantly as fuel prices spiked in 2008 and maintained a cautious approach to reinstating capacity to the market this year.

Latin American carriers continue to benefit from very strong regional economic growth particularly in the south of the region, boosting freight, travel and profits. The profit forecast has improved slightly from $900 million to $1 billion in 2010.

Middle Eastern airlines have gained from strong regional economies and an expanded share of long-haul markets while prospects for African airlines remain unchanged from the previous forecast of $100 million in profit.


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