IATA raises global airline profit forecasts for 2013 and 2014

Thu Dec 12, 2013 6:47am EST
 
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By Robert Evans and Tom Miles

GENEVA (Reuters) - Airlines lobby group IATA has raised its forecast for airline profits this year by 10 percent and predicted passenger numbers topping 3 billion for the first time, reflecting lower jet fuel costs, improved efficiency and global economic growth.

The International Air Transport Association said on Thursday it expected total airline profits to reach $12.9 billion this year, having only three months ago cut its forecast to a total of $11.7 billion.

In projections which are closely watched for a barometer of the sector's health, the body also predicted profits growing to $16.4 billion in 2014, though it said cargo demand remained stagnant.

"2013 will see passenger numbers top 3 billion for the first time, increasing to 3.3 billion in 2014," IATA Director General Tony Tyler told a news conference.

"The average margin of the airline industry, even next year, which if we are correct will see the highest absolute profit ever, will be 2.6 percent. Many airlines will do better than this and many others will underperform," Tyler said.

Profit per passenger is expected to leap to $4.13 in 2013 from $2.49 in 2012, then reach an average $5.94 in 2014, said IATA, whose members include the likes of Lufthansa (LHAG.DE: Quote), British Airways (part of ICAG (ICAG.L: Quote)), American Airlines (AAL.O: Quote) and Cathay Pacific (0293.HK: Quote).

But without revenue from ancillary services such as lounge access, priority lanes at airports and pre-approved cabin baggage, the industry would be in the red. Ancillary revenue is forecast at about $13 per passenger.

Improved efficiency means airlines are expected to use a record 81 percent of available passenger capacity in 2014. But they will struggle to use the extra cargo capacity that comes with flying more planes.   Continued...

 
A passenger aircraft, with the full "Harvest Moon" seen behind, makes its final approach to landing at Heathrow Airport in west London, September 19, 2013. REUTERS/Toby Melville