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Airlines to earn higher than former forecast
Source: Bloomberg News |
December 14, 2012, Friday
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AIRLINE earnings this year may be 63 percent higher than previously forecast as capacity cuts and mergers prompted by the economic slump take hold, the International Air Transport Association said yesterday.
Industry-wide net income should reach US$6.7 billion, versus a forecast of US$4.1 billion in October, IATA said. Profit next year may increase to US$8.4 billion, US$900 million more than last predicted though still short of the US$8.8 billion return in 2011.
Sluggish growth and fuel costs have weighed on earnings for the past two years, triggering efforts to reduce capacity, cut costs and accelerate consolidation. The biggest improvement has been in Europe, where airlines that were forecast to lose US$1.2 billion will break even in the wake of job cuts and takeovers.
"There are further opportunities for consolidation in Europe," IATA Chief Executive Officer Tony Tyler said. Smaller airlines may find a home in the big three groups of Air France-KLM Group, Deutsche Lufthansa AG and International Consolidated Airlines Group, though others could also go bust, he added.
The forecast performance for Europe's airlines would still represent a US$400 million decline from a year ago. North American carriers will be among the few to see gains on last year, with a likely collective profit of US$2.4 billion, IATA said.
Asia-Pacific operators may see the largest drop, IATA said, with a profit of US$3 billion, down from US$5.4 billion.
Margins remain "perilously close" to the point where the industry turns to a loss, IATA said. Net income may reach 1 percent of revenue this year and 1.3 percent in 2013.
Industry-wide net income should reach US$6.7 billion, versus a forecast of US$4.1 billion in October, IATA said. Profit next year may increase to US$8.4 billion, US$900 million more than last predicted though still short of the US$8.8 billion return in 2011.
Sluggish growth and fuel costs have weighed on earnings for the past two years, triggering efforts to reduce capacity, cut costs and accelerate consolidation. The biggest improvement has been in Europe, where airlines that were forecast to lose US$1.2 billion will break even in the wake of job cuts and takeovers.
"There are further opportunities for consolidation in Europe," IATA Chief Executive Officer Tony Tyler said. Smaller airlines may find a home in the big three groups of Air France-KLM Group, Deutsche Lufthansa AG and International Consolidated Airlines Group, though others could also go bust, he added.
The forecast performance for Europe's airlines would still represent a US$400 million decline from a year ago. North American carriers will be among the few to see gains on last year, with a likely collective profit of US$2.4 billion, IATA said.
Asia-Pacific operators may see the largest drop, IATA said, with a profit of US$3 billion, down from US$5.4 billion.
Margins remain "perilously close" to the point where the industry turns to a loss, IATA said. Net income may reach 1 percent of revenue this year and 1.3 percent in 2013.
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