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Global airlines cut earnings outlook
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Global airlines cut their 2013 industry profit forecast by 8 percent to US$11.7 billion yesterday, citing weaker growth in parts of Asia and a worsening slowdown in freight demand.
The International Air Transport Association, which represents some 200 carriers, said the US$1 billion downgrade from its previous forecast for the whole industry in June also reflected a spike in oil prices driven by the Syrian crisis.
“The industry situation is not improving as quickly as we had expected,” IATA Director General Tony Tyler said.
“I should stress that this is still an improvement over the 2012 profit of US$7.4 billion.”
For 2014, IATA predicted a rebound in profits to US$16.4 billion on hopes of rising business and consumer confidence and a respite in oil prices. However, its chief economist warned any prolonged spike in fuel costs could upset this scenario.
“Emerging market growth in India, Brazil and to a certain extent China has been slower than anticipated,” Tyler said on a conference call.
“This has been somewhat balanced by improvements in the US economy as well as a stabilization in the eurozone.”
IATA raised its forecasts slightly for North American and European airlines as US carriers consolidate and cut capacity, and Europe’s financial crisis shows signs of easing.
But Tyler said he was concerned about a US government attempt to block a proposed merger between US Airways and American Airlines, saying it contradicted a general shift away from regulation in air transport.
For Asia, which is set to become the leading power in aviation in coming years, IATA cut a third off its profit forecast to US$3.1 billion.
Although China’s domestic market continues to grow and Japan’s monetary expansion is boosting that country’s carriers, China’s international routes and Indian markets face pressure.
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