IATA says airline profits will fall 46% this year
03.03.11
Airline body the International Air Transport Association (IATA) has warned that global airline profits will fall by 46% this year compared to 2010, as rising oil prices push up fares and costs. It has forecasting that industry profits will be $8.6bn (£5.2bn) this year, as its fuel bill rises by $10bn to $166bn following the rise in the oil price above $110 a barrel in recent weeks.
Fuel accounts for about a third of the industry's cost base. IATA said fares have climbed 20% since 2009 and it is forecasting a further increase in average fares of 1.5% this year. Giovanni Bisignani, IATA's director general and chief executive, said the industry was now balanced on a ‘very thin’ profit margin of 1.4%. He said: ‘There is very little buffer for the industry to keep its balance as it absorbs shocks. Today oil is the biggest risk.'
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