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GENEVA: The global airlines body IATA predicted yesterday that the industry would increase profits by 58 percent this year, driven by growing passenger and cargo demand in emerging markets and better prospects for the world economy.
But IATA, the International Air Transport Association, warned that the spin-off from the Cyprus banking crisis and its effect on the stability of the euro could reverse the upward trend in total industry revenues.
The grouping which represents some 80 percent of global carriers, said it expects them to make a net profit of $10.6bn in 2013, up from an earlier forecast of $8.4bn and well above the $6.7bn achieved in 2012.
“Against a backdrop of improved optimism for global economic prospects, passenger demand has been strong and cargo markets are starting to grow again,” Tony Tyler, IATA’s director general and chief executive, told a news conference.
“It’s a small step in the right direction. It will raise the airline industry’s net profit margin to 1.6 percent,” he said. In 2012, profitability was just one percent.
Leading the field in expected absolute revenue growth, based on figures for the first quarter, are airlines in the Asia-Pacific region where China’s domestic travel market is expanding rapidly, said the body’s chief economist Brian Pearce.
Overall revenue for the industry is now expected to hit $671 billion this year, $12bn up on the earlier forecast issued at the end of 2012, and versus $637bn in 2012. But costs — mainly related to fuel — were also expected to rise by $9bn to $10bn, according to IATA.
The Geneva-based body said passenger traffic is expected to rise by 5.4 percent compared with the previous prediction of 4.5 percent and the 5.3 percent growth of 2012. Cargo, which saw negative growth of 1.5 percent last year, is likely to be up 2.7 percent, 1.3 percent more than forecast last December in IATA’s year-end review. Reuters