Airline earnings forecast reduced

Comment on this story

London - Airline earnings for this year would be $1 billion (R11bn), or 5 percent, lower than previously predicted as political tensions drove up oil prices and growth in emerging markets slowed, the International Air Transport Association (Iata) said yesterday.

Carriers would earn a combined net income of $18.7bn, versus the $19.7bn forecast on December 12, the Geneva-based industry group said. Revenues would reach about $745bn, almost $2bn higher than previously projected.

“This can be characterised as a tweak,” Iata chief executive Tony Tyler said.

“The overall story is positive. Staying in the black is a major achievement reflecting the restructuring that has taken place.”

The cost of crude would rise to an average $108 a barrel, $3.50 higher than expected, adding about $3bn to the industry’s fuel bill, Iata said.

Kerosene accounted for about 30 percent of airline expenses, though an economic upturn was spurring demand to a level that largely compensated for the impact on oil prices of geopolitical instability, it said.

North American carriers would make the biggest earnings contribution, generating $8.6bn this year, $300 million better than earlier projections, Iata said, aided by the formation of American Airlines Group from a merger of AMR and US Airways Group.

The deal followed the takeover of Northwest Airlines by Delta Air Lines and the UAL-Continental Airlines merger.

European carriers will post net income of $3.1bn this year, a $100m drop from earlier forecasts, while Asia-Pacific operators should lift earnings to $3.7bn and carriers in Africa will earn money for the first time since 2010. – Bloomberg

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines