Home News IATA again cuts airline profit forecast

IATA again cuts airline profit forecast


Forecast for airline post-tax profits in 2012 now at $3 billion

IATA has chosen to downgrade its forecast for airline net post-tax profits in 2012 to $3 billion, down from $3.5 billion. Oil supply concerns have led the airline body to raise its forecast for oil prices this year to be raised to $115 a barrel, adding significantly to costs. Yet the damage to profitability has so far been limited by the boost to revenues from improving business and consumer confidence and higher load factors.
“We also now expect airlines to be able to hold capacity below demand growth, improving asset utilisation and partially offsetting higher fuel and tax costs,” the IATA forecast reads.
Airlines ended 2011 with a slightly better than expected performance, but European airlines are still expected to come under pressure this year from the recession in many parts of Europe as well as the impact of taxation and the EU ETS.
IATA cautions: “We estimate the impact of the risk of oil prices being pushed to $150/b in the second half of 2012, were the situation in Iran to deteriorate significantly – in this scenario we estimate the industry could be pushed into losses exceeding $5 billion.”
Wall Street Journal


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