The International Air Transport Association on Monday
predicted that airlines worldwide would pull in aggregate 2012 profits of $4.1
billion, an increase of $1.1 billion from the association's June forecast. IATA
expects the global airline industry in 2013 to lift itself further away from
the red by netting $7.5 billion in full-year profits.
"Even six years ago, generating a profit with oil at
$110 per barrel would have been unthinkable," according to IATA director
general and CEO Tony Tyler. "The industry has reshaped itself to cope by
investing in new fleets, adopting more efficient processes, carefully managing
capacity and consolidating."
IATA's newly issued forecast improved most for North
American airlines, which now are expected to rake in aggregate 2012 net profits
of $1.9 billion, up $500 million from the previous forecast. The association
cited "the impact of tight capacity management."
The picture is quite different in Europe, a region beset by
a dour economic backdrop. IATA projects carriers there to lose $1.2 billion,
"the largest loss of any region." While the association noted that
European carriers this year have made "moderate" traffic gains, the
lagging premium market on the North Atlantic precludes profitability. "Additionally,
the region is plagued by high taxes, inefficient air traffic management
infrastructure and an onerous regulatory environment," according to IATA.
Meanwhile, airlines in Asia/Pacific, Latin America and the
Middle East should close the year with profits. IATA predicted that Middle East
carriers will net $700 million this year, while Latin American carriers in
aggregate will close 2012 with $400 million in profits. Asia/Pacific carriers are
on pace to bring in the highest profit levels this year of any region with a
projected $2.3 billion in aggregate net income.
African carriers as a group are on pace to break even in
2012, a slight improvement from IATA's previous forecast of a $100 million
loss.
Looking ahead to 2013, IATA's profit forecast is pegged
"to slightly stronger economic growth and lower oil prices." Global gross
domestic product next year should grow by about 2.5 percent from 2012 levels,
while oil is forecast to fall to an average of $105 per barrel of Brent crude
from the $110 per-barrel average anticipated for
full-year 2012, according to IATA.
While better than in 2012, the industry's projected 2013
profit margin of 1.1 percent represents a return on capital that is "far
below other industries," according to IATA.
"Regional divergences will persist in 2013,"
according to IATA. "North American airlines are expected to continue to
improve profitability based on tight capacity management. Asia/Pacific carriers
will see a profitability boost from improved cargo volumes (if not yields).
European airlines are expected to be the only region in the red for 2013,
although losses will be trimmed as a result of slower capacity growth and
improved global trading conditions on long-haul markets."