Middle East airlines suffer in IATA profit forecast
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
Elsewhere at the IATA AGM in Singapore, the association revealed it had further downgraded its 2011 airline industry profit forecast to $4 billion. The reforecast represents a 54% fall compared with the $8.6 billion profit forecast in March and a 78% drop compared with the $18 billion net profit (revised from $16 billion) recorded in 2010. On expected revenues of $598 billion, a $4 billion profit equates to a 0.7% margin.”Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations to $4 billion this year. That we are making any money at all in a year with this combination of unprecedented shocks is a result of a very fragile balance. The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel. But with a dismal 0.7% margin, there is little buffer left against further shocks,” said Giovanni Bisignani, IATA’s Director General and CEO.IATA predicts that Middle East carriers will deliver a $100 million profit, down from $900 million in 2010. Political unrest in parts of the region is hurting demand. The major airlines in the region are expected to continue to win market share on long-haul markets, flying passengers via Middle Eastern hubs. However, high fuel costs will weaken demand from key passenger segments and asset utilisation will be under downward pressure. Capacity growth of 15.5% is expected to outstrip demand expansion of 14.6%.
Comments are closed.