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            january 19, 2020

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IATA increased its global profit forecast


The International Air Transport Association (IATA) has increased its global profit forecast for aviation for 2011 with much of the market share taken up by Asia-Pacific carriers while freight prospects appear uncertain this year and next, according to the Shipping Gazette.
IATA chief executive Tony Tyler, recently the CEO of Hong Kong's Cathay Pacific Airways, has increased his June forecast of US$4 billion to $6.9 billion, an increase attributed to a 6.4 per cent growth in passenger demand over first seven months of the year.
"Despite the economic doom and gloom, people are travelling," Mr Tyler said in a statement, in turn creating strong revenues of $594 million but only "a paltry 1.2 per cent" margin.
But freight volumes are different with a drop year on year from 5.5 per cent to 1.4 per cent, revised down to 46.4 million tonnes of cargo from 48.2 million. The cargo uplift of 2010 due to inventory re-stocking is unlikely to return even thought oversupply of bellyhold on passenger flights growth has been revised to three per cent from its previous four per cent.
Even the most profitable Asia-Pacific carriers are bruised by cargo weakness with a global loss of $5 billion in revenue projection forecast in June. Three of the region's carriers, Qantas, Virgin Australia and Air New Zealand, are projected to make $2.5 billion in profit in 2011.
Collectively the region's airlines will suffer a profit decline $8 billion year on year, partly because of supply chain problems in the Japan after the earthquake and tsunami and high oil prices that retained its estimated $110/per barrel, 39 per cent higher than the $79.4 average price of 2010. But IATA also predicted a strong regional rebound late 2012.
Middle East carriers are just behind Asia-Pacific in growth despite political instability and are expected to generate revenues of $800 million.
African carriers fared worst in IATA forecast, which saw losses ahead of $100 million with European carriers gaining traction on the back of a weakening euro.
IATA forecast a weak ending to 2011 with sluggish growth into early 2012 and a decreased net profit for next year at $4.9 billion. "A long slow struggle lies ahead," said Mr Tyler, for an industry teetering on a global GDP slowdown of two per cent, adding that anything less would create further losses.
"We will be perilously close to that level at least through 2012. The industry is brittle. Any shock has the potential to put us in the red," he added.

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