The International Air Transport Association said on Wednesday it expects the industry to post a larger profit in 2007 than it previously anticipated as demand grows and carriers benefit from leaner, more efficient operations.
The global airlines body raised its 2007 forecast for global industry profit -- the first in six years -- to USD$7.2 billion from USD$6.2 billion previously, Chief Executive Giovanni Bisignani said at an industry event in New York.
IATA cut its forecast of the global industry's losses in 2006 by half to USD$2.2 billion. US carriers are expected to lose USD$5.4 billion in 2006, half the losses they posted in 2005.
But Bisignani warned against being too optimistic, as the returns would still be small compared with the size of the industry, and adverse events -- such as a bird flu pandemic among humans and another surge in fuel prices -- could again throw airlines off track.
"There are some wild cards beyond our control -- avian flu and security among them," Bisignani said. "If we are looking for a common villain, it is fuel."
Airlines have been reeling under high fuel prices but have been cutting costs and improving efficiencies with the help of better aircraft and operational changes. They have also seen traffic improve over the last couple of years as economies recover and more people travel.
The association, which represents 265 airlines accounting for 94 percent of international traffic, said a recent survey of airline chief financial officers found that more than two-thirds of the executives polled expected profitability to increase over the next year.
"I believe there is a new optimism in the industry," Bisignani said.
Bisignani said expectations have also risen because things are changing for the better in the United States -- where the industry has seen major airlines such as Delta Air Lines and Northwest Airlines go bankrupt -- as carriers cut costs and reduce capacity.
However, there are fears of a build-up in capacity internationally following record aircraft orders and as US carriers shift their focus to more profitable foreign routes.
"Careful matching of capacity to demand will be critical," Bisignani said.
Airwise News
The global airlines body raised its 2007 forecast for global industry profit -- the first in six years -- to USD$7.2 billion from USD$6.2 billion previously, Chief Executive Giovanni Bisignani said at an industry event in New York.
IATA cut its forecast of the global industry's losses in 2006 by half to USD$2.2 billion. US carriers are expected to lose USD$5.4 billion in 2006, half the losses they posted in 2005.
But Bisignani warned against being too optimistic, as the returns would still be small compared with the size of the industry, and adverse events -- such as a bird flu pandemic among humans and another surge in fuel prices -- could again throw airlines off track.
"There are some wild cards beyond our control -- avian flu and security among them," Bisignani said. "If we are looking for a common villain, it is fuel."
Airlines have been reeling under high fuel prices but have been cutting costs and improving efficiencies with the help of better aircraft and operational changes. They have also seen traffic improve over the last couple of years as economies recover and more people travel.
The association, which represents 265 airlines accounting for 94 percent of international traffic, said a recent survey of airline chief financial officers found that more than two-thirds of the executives polled expected profitability to increase over the next year.
"I believe there is a new optimism in the industry," Bisignani said.
Bisignani said expectations have also risen because things are changing for the better in the United States -- where the industry has seen major airlines such as Delta Air Lines and Northwest Airlines go bankrupt -- as carriers cut costs and reduce capacity.
However, there are fears of a build-up in capacity internationally following record aircraft orders and as US carriers shift their focus to more profitable foreign routes.
"Careful matching of capacity to demand will be critical," Bisignani said.
Airwise News
