Global airline industry rebounding strongly this year but faces tougher 2011, group says

By Alex Kennedy, AP
Tuesday, September 21, 2010

Airline industry rebounding strongly, group says

SINGAPORE — Global airlines have rebounded faster than expected from the recession after losing nearly $26 billion over 2008 and 2009, the industry association said Tuesday, raising its profit forecast for this year.

The International Air Transport Association said airline profits for 2010 will likely total $8.9 billion on revenue of $560 billion, more than the group’s forecast in June of $2.5 billion profit on sales of $545 billion.

“This is a significant improvement, but not enough for a big celebration,” IATA chief executive Giovanni Bisignani said at a news conference in Singapore.

The global economy, led by Asia, has made a quicker recovery from last year’s recession than the IATA expected, helping to boost passenger numbers and cargo. Global demand will likely expand 11 percent this year while capacity - or the number of seats - will grow 7 percent, the IATA said.

Airlines had losses of $9.9 billion last year and $16 billion in 2008. The IATA represents about 230 airlines accounting for 93 percent of international air traffic.

Asia will lead growth this year with a $5.2 billion profit while Europe will remain the only region to lose money, the IATA said. North American airlines should earn $3.5 billion this year as U.S. carriers keep capacity limited, according to the group.

Global airline profit is forecast to fall to $5.3 billion next year as government stimulus spending slows, some countries implement austerity measures and unemployment rates remain high in developed nations.

“It’s clear there will be a slowdown in the fourth quarter,” Bisignani said. “2010 is as good as it gets. It will be the peak of the cycle. 2011 will be a much tougher year.”

IATA expects crude oil to average $79 a barrel this year and next, but sees fuel oil rising to $93 from $90, helping to raise the industry’s overall expenses to $575 billion in 2011 from $539 billion in 2010.

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