Airlines to return to profit this year: IATA

7th June 2010, Comments 0 comments

The airline industry should be profitable this year for the first time since 2007, led by strong growth in the Asia-Pacific region, the International Air Transport Association said on Monday.

"We are upgrading our global industry forecast to a full year profit of 2.5 billion dollars (2.1 billion euros)," IATA director general Giovanni Bisignani told the annual general assembly in Berlin.

In March, IATA estimated its members would post a loss of about 2.8 billion dollars this year, following a shortfall of 9.4 billion dollars in 2009.

Bisignani said that while the industry would be profitable, "with a (profit) margin of 0.5 percent it will be a modest party."

In 2007, before the global financial crisis broke, airlines posted combined profits of 12.9 billion dollars.

The recovery will be uneven, the IATA head warned, but "Europe with its weak economy will be the only region in the red, with a 2.8 billion (dollar) loss."

Last year, European airlines lost 4.3 billion dollars.

For 2010, in addition to weak traffic in the winter months, Europe has had to contend with a volcanic ash cloud from Iceland that forced the cancellation of some 100,000 flights in April.

The volcano cost the airlines some 1.8 billion dollars in lost revenue, Bisignani said.

British Airways chief executive Willie Walsh again criticised European officials for their "wrong decision" to close much of the continent's airspace as a safety precaution.

The IATA head meanwhile warned about the risk of surplus capacity, with airlines building up their fleets while the cost of flight crew rose.

He called on pilots and other flight personnel to be moderate in salary demands.

"Pilots and crew must come down to earth and strikes at this time are shortsighted nonsense," he said.

BA is currently embroiled in a stand-off with cabin crew over pay and conditions which has caused substantial losses over recent weeks.

Bisignani said he was positive on the industry for the longer-term, saying that he expected airlines to have almost no accidents by 2050 and to cut carbon dioxide emissions by half.

Best of all, "we will have eliminated queues with integrated systems ensuring security as we process more passengers," he forecast.

By then, the sector "will be a consolidated industry of a dozen global brands supported by regional and niche players," the IATA head said.

"In just over a decade, I can see 100 billion dollars in industry profits on revenues of one trillion dollars," he said.

© 2010 AFP

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