IATA on Monday predicted that airlines worldwide would pull in aggregate 2012 profits of $4.1 billion, an increase of $1.1 billion from the association's June forecast.
IATA expects the global airline industry in 2013 to lift itself further away from the red by netting $7.5 billion in full-year profits.
"Even six years ago, generating a profit with oil at $110 per barrel would have been unthinkable," according to IATA director general and CEO Tony Tyler. "The industry has reshaped itself to cope by investing in new fleets, adopting more efficient processes, carefully managing capacity and consolidating."
IATA's newly issued forecast improved most for North American airlines, which now are expected to rake in aggregate 2012 net profits of $1.9 billion, up $500 million from the previous forecast. The association cited "the impact of tight capacity management."
The picture is quite different in Europe, a region beset by a dour economic backdrop. IATA projects carriers there to lose $1.2 billion, "the largest loss of any region."
While the association noted that European carriers this year have made "moderate" traffic gains, the lagging premium market on the North Atlantic precludes profitability. "Additionally, the region is plagued by high taxes, inefficient air traffic management infrastructure and an onerous regulatory environment," according to IATA.
Meanwhile, airlines in Asia-Pacific, Latin America and the Middle East should close the year with profits. IATA predicted that Middle East carriers will net $700 million this year, while Latin American carriers in aggregate will close 2012 with $400 million in profits.
Asia-Pacific carriers are on pace to bring in the highest profit levels this year of any region with a projected $2.3 billion in aggregate net income.
African carriers as a group are on pace to break even in 2012, a slight improvement from IATA's previous forecast of a $100 million loss.
Looking ahead to 2013, IATA's profit forecast is pegged "to slightly stronger economic growth and lower oil prices."
Global gross domestic product next year should grow by about 2.5% from 2012 levels, while oil is forecast to fall to an average of $105 per barrel of Brent crude from the $110 per-barrel average anticipated for full-year 2012, according to IATA.
While better than in 2012, the industry's projected 2013 profit margin of 1.1 percent represents a return on capital that is "far below other industries," according to IATA.
"Regional divergences will persist in 2013," according to IATA. "North American airlines are expected to continue to improve profitability based on tight capacity management. Asia-Pacific carriers will see a profitability boost from improved cargo volumes (if not yields). European airlines are expected to be the only region in the red for 2013, although losses will be trimmed as a result of slower capacity growth and improved global trading conditions on long-haul markets."
Source: Business Travel News