IATA marginally increases airline outlook
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
International Air Transport Association (IATA) has announced an improved financial outlook for the aviation industry after airlines posted higher revenues than expected.
The association now expects airlines to have a post-tax profit margin of 1.6%, up from its previous forecast of 1.3%. This would amount to US$10.6 billion (GBP7bn) instead of its previous estimate of GBP5.5bn.
As well as an improved airline industry the GDP forecast for the year has been upgraded to 2.4% from 2.1% and there has been a boost in business confidence.
However, it warned that the Cypriot financial crisis had shown the Eurozone is not out of its troubles so its figures could be impacted.
“Against a backdrop of improved optimism for global economic prospects passenger demand has been strong and cargo markets are starting to grow again. The economic optimism is also pushing fuel prices higher,” said Tony Tyler, director general of IATA. “We are seeing a GBP7.9bn improvement in revenue, and a GBP5.9-6.6 billion increase in costs—most of which is related to fuel.”
European airline are expected to make GBP528m profit, up from GBP197m in 2012. Long-haul routes are expected to drive growth as the domestic market suffers. Demand in Europe is predicted to grow 2.6% in line with a 2.5% rise in capacity.