11/02/12, 01:22:10 EST

  e-mail this article

IATA cuts FY08 global airline profitability forecast; raises FY07 outlook

forbes.com

PARIS - The International Air Transport Association has cut its forecast for world airlines' net profit in 2008 to 7.8 bln usd from 9.6 bln usd because of high fuel prices and the effects of current turmoil in the credit markets.

IATA upped its forecast for 2007 to 5.6 bln usd from its June forecast of 5.1 bln.

'While we are more optimistic for 2007, the continuing high price of oil combined with turmoil in credit markets is a cause for concern in 2008,' said director general and CEO Giovanni Bisignani.

'The impact of the credit crunch puts some question marks over the industry's performance next year and the continuing high price of fuel will become more difficult to mitigate with efficiency gains,' Bisignani added.

IATA said the industry is characterised by 'a substantial shift in relative regional performance, primarily driven by capacity increases'.

IATA is forecasting a net profit of 2.7 bln for North American carriers this year, 'the highest among the major regions', while 'poorer yields from Asia-Pacific carriers combined with sluggishness in cargo markets saw a decline in absolute profits from 1.2 bln in 2005 to an expected 700 mln in 2007.'

'Europes carriers continued to benefit from buoyant long-haul markets, improving profitability continually from 1.6 bln in 2005 to an expected 2.1 bln this year,' Bisignani added.

Asia-Pacific carriers have added 42 pct to their capacity since 2001, improving load factors by 2 percentage points while European operators have added 29 pct to capacity and upped load factors by 5 percentage points. North Americans have added 11 pct to capacity and increased load factors by 6 percentage points, according to IATA.

 Printable Version  | published Sep 18, 2007