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IATA Issues 'more subdued' $5.3 Billion Profit Forecast for 2011

posted Oct 20, 2010, 5:33 AM by Elaine Bell

IATA issues 'more subdued' $5.3 billion profit forecast for 2011

By Linda Blachly | October 20, 2010

IATA said Tuesday that the prospect of only moderate economic growth next year led to it issuing a "more subdued $5.3 billion [aggregate global net profit] outlook for 2011" compared to its $8.9 billion industry profit forecast for full year 2010 (ATW Daily News, Sept. 22).

IATA said 70% of respondents to its latest "Business Confidence Index" quarterly survey of airline CFOs and cargo heads reported increases in passenger demand and more than 75% reported increases on the cargo side. Expectations for further improvements in demand in the next 12 months are "still high but look to be moderating rather than accelerating," the organization said. "Restocking activity, which stimulated freight traffic, has drawn to a close," the report stated.

The majority of respondents believe yield outlook has improved, driven by "increased demand, improving premium/economy mix and relatively tight demand-supply conditions." The outlook for further yield improvement has "dipped back," although still remains positive, it said.

Capacity is "returning to markets at an accelerating pace and, combined with moderating demand growth, could see yield growth flatten out," according to the survey report, which cited several factors such as "increasing aircraft utilization" that have offset higher fuel prices faced by some and helped to keep unit costs stable. Respondents see this stability continuing over the next 12 months, IATA said.