Global airlines will record in 2013 a combined net profit of $12.7 billion, up from a previous forecast of $10.6 billion, while Middle Eastern carriers will generate $1.5 billion -- higher than the $1.4 estimated in March, the International Air Transport Association, or IATA, reports.
The latest upbeat forecast was based on lower oil prices, optimum load factor and belt-tightening by carriers across the globe.
This revised outlook for Middle Eastern carriers is far rosier than the $1.1 billion profit predicted by Iata in 2012 and stronger than the $900 million profit recorded last year. Globally, the new estimate represents a 67 percent gain on last year's profit of $7.6 billion.
Iata chief executive officer Tony Tyler said at the World Air Transport Summit in Cape Town that airlines were set to carry more than three billion people for the first time this year.
Most carriers have resisted adding seats to chase market share. The strategy should lift their average load factor, or seat occupancy, to a record 80.3 per cent, Tyler pointed out. "Airlines have done a pretty good job of being profitable in very difficult circumstances" that include rising oil prices and slowing economic growth, Tyler said.
With the improved outlook, the industry's earnings will equal just 1.8 per cent of its $711 billion in revenue, trailing a profitability high for the past decade of 3.3 per cent set in 2010.
Carriers in all regions should post a profit this year, led by airlines in Asia with projected earnings of $4.6 billion and North America with $4.4 billion, Iata, which represents 240 carriers accounting for 84 percent of global traffic, said in a statement.
However, margins remained weak amid Europe's ongoing debt crisis. "The day-to-day challenges of keeping revenues ahead of costs remain monumental. On average, airlines will earn about $4 for every passenger, which is less than the cost of a sandwich in most places," he said.
Tyler said record passenger numbers and growth in "ancillary" revenues were the two key reasons driving improved profitability. Airlines are expected to fill a record 80.3 per cent of seats and transport an unprecedented 3.13 billion passengers in 2013, up from 79.2 per cent and 2.98 billion respectively last year, as operational changes and better capacity management filter through.
Ancillary revenues would rise to $36 billion, or five percent of total turnover, as airlines unbundle more services from base fares and charge for additional services such as meals, extra baggage and seats.
"These are significant factors that are driving performance," Tyler said.
Earlier in separate address, Tyler said US airlines were poised to go on an international offensive following mergers and job cuts that have delivered leaner companies better able to compete with rivals from Asia and the Middle East. "We're going to see more competition now internationally as the US carriers operate from a stronger base," Tyler said.
European airlines should accrue net income of $1.6 billion, with those from Latin America generating about $600 million.
Copyright 2013 - Khaleej Times, Dubai, United Arab Emirates
