IATA lowers 2013 global industry outlook to $11.7 billion

As the performance of the airlines continued to grow at a slower-than-anticipated pace, The International Air Transport Association (IATA) revised its 2013 global industry outlook downwards to $11.7 b

As the performance of the airlines continued to grow at a slower-than-anticipated pace, The International Air Transport Association (IATA) revised its 2013 global industry outlook downwards to $11.7 billion on revenues of $708 billion. This mirrors the impact on demand of the oil price spike associated with the Syrian crisis and disappointing growth in several key emerging markets.

Tony Tyler, IATAโ€™s Director General and CEO, said โ€œOverall, the story is largely positive. Profitability continues on an improving trajectory. But we have run into a few speed bumps. Cargo growth has not materialized. Emerging markets have slowed. And the oil price spike has had a dampening effect. We do see a more optimistic end to the year. And 2014 is shaping up to see profit more than double compared to 2012.โ€

After comparing with the net profit of $7.4 billion recorded in 2012, the performance is much better in 2013, and is expected to further improve in 2014 with the airlines returning as much as $16.4 billion in net profit. If this happens, 2014 would be the 2nd strongest year for IATA after 2010 ($19.2 billion) in this century.

The achievement of the airlines is likely to remain firm with an operating margin of 3.6 percent, as recorded in 2006, against a 54 percent increase in the prices of jet fuel. This was possible because of the structural changes that have been brought about through joint ventures, consolidation, improved ancillary sales and reduction in entry because of the tightness being experienced by the financial markets.

Moreover, the industry is expected to perform better irrespective of the predicted 2 percent global economic growth. Earlier on, it was believed that the airlines would post losses if the global economic expansion was below the 2 percent cut off mark.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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