São Paulo – The combined net profit of airlines worldwide should be US$ 11.7 billion this year; combined revenues should be US$ 708 billion. According to the 2013-2014 forecasts released last Monday evening (23rd) by the International Air Transport Association (IATA), the industry continued to grow in quarter two this year from quarter two 2012, though at a lower rate than last June’s US$ 12.7 billion forecast.
According to the IATA, which is composed of 240 different airlines, the reasons for the downward revision were instability in Syria, the oil price hike, and lower-than-expected growth in emerging markets such as Brazil.
“Overall, the story is largely positive. Profitability continues on an improving trajectory. But we have run into a few speed bumps. Cargo growth has not materialized. Emerging markets have slowed. And the oil price spike has had a dampening effect. We do see a more optimistic end to the year. And 2014 is shaping up to see profit more than double compared to 2012,” said the IATA director general and CEO Tony Tyler.
If on the one hand the price of oil has dampened profit, on the other hand, the IATA has stated that airlines have succeeded in cushioning the rising costs by changing their structure, expanding partnerships with other airlines, and reducing new flights.
Despite the lower growth forecast for this year, airlines in some regions are expected to grow above June forecasts. Regions whose performances have improved include the Middle East and North America.
Middle East airlines are expected to post a combined profit of US$ 1.6 billion in 2013. The prior forecast was US$ 1.5 billion. According to the IATA, the reasons for the increase include the region’s efficient hubs (airports from which flights are distributed), which are seeing good results in long-distance routes.
North American airlines should see a combined US$ 4.9 billion in profit in 2013. The estimated released last June was US$ 4.4 billion. The main reasons for the upward revision, according to the IATA, were improvement in airlines’ structures, consolidation of international partnerships, and increased efficiency.
Latin American countries should see a combined profit of US$ 600 million, a forecast equal to the one released three months ago. The IATA notes that economic “weakness” in Brazil will be offset by better performance by airlines, new flights to Africa and Asia, and expansion in routes to North America. The IATA forecasts combined profits of US$ 1.7 billion for European airlines (as against a previous US$ 1.6 billion), US$ 3.1 billion in Asia-Pacific (as against US$ 4.6 billion) and US$ 100 million in losses for African airlines, as against a previous estimate of US$ 100 million in profit.
For 2014, the IATA expects a combined profit US$ 16.4 billion for airlines worldwide. The organization believes oil prices should fall and the global Gross Domestic Product (GDP) should rise. Middle East airlines should see their highest profit ever: US$ 2.1 billion; Latin American airlines should post US$ 1.1 billion; African airlines are expected to profit US$ 100 million; North American airlines should see US$ 6.3 billion; European airlines should post US$ 3.1 billion; and Asian airlines are expected to post US$ 3.6 billion in profit.
*Translated by Gabriel Pomerancblum
