IATA lifts industry profits outlook

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IATA has lifted its forecast for collective airline net profits this year to $6.7 billion on a mixture of strong traffic growth, improved yields and airline restructuring efforts.

Back in October, the industry body forecast collective profits of $4.1 million, itself an upgrade on its June forecast. However, the prediction still falls short of the $7.9 billion airlines enjoyed in 2011.

It believes Asia-Pacific carriers will hit profits of $3 billion, up from $700 million previously, and further raised its outlook for North American carrier profitability to $2 billion.

Significantly it now sees European carriers breaking even this year - compared to fears in October that they could rack up losses of $1.2 billion. This largely reflects restructuring efforts and stronger traffic growth driving improved results in the second and third quarters.

Its outlook for the Middle East was slightly upgraded to $800 million while profit levels in Latin America and Africa are unchanged at $400 million and break-even respectively.

IATA has also lifted its industry outlook for next year. It had previously expected collective profits of $7.5 billion for 2013, but now expects this to reach $8.4 billion.

"It is still a quite a difficult economic environment, but its one where the downward pressures are starting to ease," says IATA chief economist Brian Pearce. "That should allow some improvement in airline profitability next year."

But he cautions: "It's still a very risky environment. There are still more downside risks to the economy than upward risk. So it's an improving environment, but one that remains very fragile."