Airline industry’s 2010 outlook soars a little higher

After coping with the worst of the global economic crisis, the International Air Transport Association (IATA) revised its 2010 industry outlook and is now projecting a profit of $8.9 billion.

The new figures are $2.5 billion higher than those estimated in June. In its first look into 2011, IATA estimates that profitability will drop to $5.3 billion.

“The industry recovery has been stronger and faster than anyone predicted. The $8.9 billion profit that we are projecting will start to recoup the nearly $50 billion lost over the previous decade. But a reality check is in order. There are lingering doubts about how long this cyclical upturn will last. Even if it is sustainable, the profit margins that we operate on are so razor thin,” said Giovanni Bisignani, IATA’s Director General and CEO.

The outlook remains positive for Asia-Pacific carriers who are expected to earn $5.2 billion in profit. This overshadows the previous peak of $3 billion seen in 2007.

IATA said that while all regions except Africa showed improved prospects compared to the previous forecast, sharp differences remain. Europe is expected to see the worst of it, even with the updated outlook they are looking at losses of $1.3 billion.

Despite the positive outlook for 2010, next year isn’t expected to to see the same growth. “This year (2010) is as good as it gets for this cycle. Governments are running out of cash for pump priming. Unemployment remains high and business confidence is weakening. And we expect the 3.2% GDP growth of 2010 to drop to 2.6% in 2011. As a result, 2011 is looking more austere. We see profitability falling to $5.3 billion with a margin of 0.9%,” said Bisignani.