Profits to reach almost $7 billion in 2011 but less than $5 billion in 2012
The ongoing deterioration in the world’s economic outlook means that weak airline market growth and weak airline profits will extend into 2012, IATA says in its latest profit forecast. Nevertheless, air travel has held up better than expected. As a result, profitability in 2011 has not weakened as much as expected and IATA has revised its 2011 forecast profits significantly upwards from $4 billion to $6.9 billion.
However, with weak major economies, weak transport markets and slipping load factors in 2012 IATA expects another year of weak profits ($4.9 billion). The region with the weakest economic and home markets outlook, Europe, is expected to generate the lowest profits in 2012, while the strongest region, Asia, including rebounding Japan, is expected to see airlines keep profitability close to the previous year’s level in 2012.
“Whenever world GDP growth has fallen below 2% in the past 40 years the industry has made losses – forecast 2.5% growth this year and 2.4% in 2012 is perilously close to this,” the association says.