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Wednesday, Dec 13, 2006

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Global airline industry may return to profit next year

Ashwini Phadnis

Geneva , Dec 12

The International Air Transport Association (IATA) has forecast that the global airline industry is expected to report a net profit of $2.5 billion during 2007, from a loss of $0.5 billion projected during the current year.

"After six years, 2007 promises some black figures. Efficiency has made the industry stronger. However, the recovery is fragile and we must get the Governments on board with change," the Director General and Chief Executive Officer, IATA, Mr Giovanni Bisignani, said at the global media briefing here on Tuesday.

The $0.5-billion loss for this year is a revision from an earlier projection of $1.7 billion. The IATA's Chief Economist, Mr Brian Pearce, said that had it not been for the $6-billion restructuring costs at Delta and Northwest Airline in the US, the whole industry would have been in profit.

"This year the airline industry has almost reached break-even at the net post-tax level following cumulative losses of $41 billion since 2001. This in itself is an achievement as global oil prices are expected to average $66 a barrel increasing the fuel bill by 23 per cent to $112 billion this year," Mr Pearce said.

Operating profit

IATA has, however, cautioned that the improvements in operating profitability could stall as the global aviation industry enters a slower growth environment next year.

Meanwhile, IATA has forecast that 500 million more people will want to fly by 2010 with the largest growth being in the Asia region. IATA has estimated that 678 million passengers will travel within Asia in 2010, against 552 million in the US domestic market, which currently is the biggest aviation market globally.

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