IATA predicts diving profits

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IATA predicts diving profits

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Global airline net profits will halve this year compared with 2010.

That the latest prediction from the industry body IATA which says rising costs for operators, especially oil prices, will offset increasing demand for flights.

The organisation’s Director-General, Giovanni Bisignani, said increased taxes such as levies on ticket prices are another threat to the struggling industry. He called on governments to review regulations to underpin airline profitability.

“We are constantly walking on a tightrope with very thin margins, and there is no buffer,” Bisignani said. “This industry is very, very fragile.”

The International Air Transport Association, which has 230 members, now expects global net profit to be $8.6 billion this year, down from $9.1 billion forecast in December.

For 2010 net profit was estimated at $16 billion in 2010, revised up from the $15.1 billion estimate in December.

The IATA global forecast includes wide variation in airline performance by region. European carriers are the least profitable of the major regions.

Those in the Asia-Pacific region are expected to produce a net profit margin of 4.6 percent as they benefit from the strong economy.