IATA has announced that it expects airlines to post a global profit of US$2,5bn in 2010. African airlines are expected to post US$100m profit – the first since 2002.
In terms of the global airline industry Iata said this was a major improvement compared with Iata’s previous forecast released in March of a US$2,8bn loss.
Industry revenues are forecast to be US$545bn in 2010, this is up from the $483bn in 2009, but still below the $564bn achieved in 2008.
“The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated. Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black. We thought that it would take at least three years to recover the US$81bn drop in revenues in 2009. But the US$62bn top line improvement this year puts us about 75% on the way to pre-crisis levels,” said Giovanni Bisignani, Iata’s director general and ceo.
“The US$2,5bn profit comes with some important health warnings. First, this represents a nett margin of just 0,5%, which is a long way from sustainable profitability. Second, a major part of the global industry is still posting big losses. A stagnating economy, strikes, natural disasters and a currency crisis have left European carriers struggling with an anticipated US$2,8 billion loss,” said Bisignani.
Highlights of the revised forecast include:
Passenger traffic is forecast to grow by 7,1% in 2010. This, according to Iata, is significantly better than the previous forecast growth of 5,6%. Over the first quarter, the industry was growing at an annualised rate of 9% for passenger traffic. Much of the cargo growth is associated with inventory re-stocking.
Yields are now forecast to grow by 4,5%. This, again, is a significant improvement from the previously forecast yield growth of 2,0% in passenger markets. The 4,5% rate is just ahead of consumer price inflation. This is contributing strongly to the 13% rise in revenues forecast for 2010. Despite the increase, revenues remain 4% below their 2008 peak.
New capacity will be added to the global system as a result of the 1 340 aircraft that are scheduled to join fleets in 2010. Of these, approximately 500 are replacement aircraft while the rest will be new capacity. Latent capacity is also present as a result of reduced long-haul fleet utilisation, which remains several percentage points below pre-crisis levels. Over the year, Iata expects an average demand improvement of 10,2% to be met with a 5,4% increase in capacity. Iata says that this will support load factors which remained near record levels for most of the first quarter.
Airspace closures following the eruption of the Icelandic volcano dented the recovery in April as a result of over 100 000 flight cancellations associated with European markets over six days. While uncertainty remains with the potential for future eruptions, it appears that this was a short-lived shock. Early May figures show a rebound in traffic for European carriers.
Despite earlier fears that the financial crisis would result in a structural change to the premium market, it now appears to be recovering cyclically in many regions alongside improvements in global trade. Premium travel was rebounding at an annualised growth rate of 20% over the first quarter and economy travel is now back to pre-recession levels. In the absence of a strong improvement in consumer confidence that would be needed to drive leisure traffic growth, it would appear that business travel also supported some of the recovery in the economy cabin.
Fuel costs continue in line with the previous forecast expectations. Iata maintains its expectation for an average annual oil price of US$79/barrel in 2010.
