A new industry estimate by the International Air Transport Association shows an improved outlook for carriers worldwide in both 2010 and 2011, with earnings of $15.1 billion and $9.1 billion, respectively.
Airlines will be making money – that’s a good thing. However, the association was quick to point out that 2011 would present more challenges by a slowed economic recovery.
Giovanni Bisignani, director general and CEO of IATA, shared sharp words of caution, describing profit margins as “pathetic.” “With a 2.7% net margin in 2010 shrinking to 1.5% in 2011, we are nowhere near covering our cost of capital. The industry is fragile and balancing on a knife edge. Any shock could stunt the recovery, as we are seeing with the results of new or increased taxation on airlines and travelers in Europe,” he stated in the association’s release.
Regional Outlook Highlights
According to IATA, carriers in North America have been forecasted to earn $5.1 billion in 2010 and $3.2 billion in 2011, with a 3.7 percent increase in demand and a capacity increase of 4.6 percent.
European carriers have been among the hardest hit with a projected profit of $400 million in 2010 and $100 million in 2011. Asia-Pacific has continued to stand out as a region of growth, with IATA forecasting a profit of $7.7 billion in 2010 and $4.6 billion in 2011.
The release can be found in its entirety at www.iata.org/pressroom/pr/Pages/2010-12-14-01.aspx
