Jump in Global Airline Profits Expected
Mar 20th 2013 2:49PM
Updated Mar 20th 2013 2:52PM
An increase in revenue is expected to drive slightly higher profits for global airlines in 2013, offsetting a rise in expenses, according to a report released today by the International Air Transport Association (IATA), a trade association representing some 240 airlines around the world comprising 84% of global air traffic.
Airlines are expected to produce a combined profit margin of 1.6% in 2013, up from the IATA's earlier projection of 1.3%. Though projections for the airline industry's net profits are $10.6 billion this year, up from the $8.4 billion IATA had initially forecast, improved global economic conditions are pushing fuel costs higher. According to IATA director general and CEO Tony Tyler, "We are seeing a $12 billion improvement in revenue, and a $9-10 billion increase in costs -- most of which is related to fuel."
Regionally, the Asia Pacific market is expected to contribute the most profit in the airline industry, $4.2 billion, per the IATA. North America airlines are estimated to report $3.6 billion, according to the report, up from the $2.3 billion profit the region generated in 2012. The Middle East, Latin American, and African regions should all post net profits in 2013, of $1.4 billion, $600 million, and $100 million, respectively.
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