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IATA NEWS : Industry Financial Forecast - December 2010

posted Dec 14, 2010, 5:32 AM by Elaine Bell
Released 14 December 2010

Key points from our full report on the outlook
for airline financial performance in 2010-11:
  • Changes are necessary due to exceptional Q3 airline results, more cautious capacity additions and stronger economic growth forecasts outside of Europe;
  • Q3 results of $10bn net profits exceeded our previous forecast of $8.9bn for whole of 2010. Q4 outlook improved from time of previous forecast in September;
  • 2010 net profits forecast is now $15.1bn (could even be higher if Q4 good);
  • Air travel has continued to grow strongly rather than slowing, reflecting stronger GDP growth outside Europe and for 2010 has been revised up to 8.9% growth from 7.7%;
  • Also non-fuel costs lower than forecast, reflecting strong improvement in aircraft utilization which was cheaper than adding new aircraft capacity;
  • European airlines lagging but Q3 profits back to pre-crisis and for 2010 as a whole now expected to be in small profit by $0.4bn;
  • Asia-Pacific airlines still expected to lead the industry with $7.7bn, followed by N American airlines with $5.1bn;
  • 2011 will see slower economic and market growth, particularly in Europe, but Asia is strong and so airline revenues do not slow as much as we had expected previously;
  • However, oil prices are higher and expected to average $84/b compared with $79/b previously, which erodes some of the benefit of higher revenues;
  • As a result net profits will fall in 2011, though at $9.1bn the decline will not be as much as previously forecast;
With recessions developing in parts of Europe in 2011 we forecast European airlines will slip back to break-even.