Global airline profit projections upgraded, but margins remain 'razor thin'

Global airline profit projections upgraded, but margins remain 'razor thin'

Global airline profits have been upgraded by $2.1 billion to $12.7 billion this year on $711 billion in revenues.

The improved forecast by Iata came despite a warning that margins remain weak with a net profit margin of just 1.8% on revenues of $711 billion.

Iata said: “Indicative of the characteristically razor thin profits of the airline industry, even this small margin will make 2013 the third strongest year for airlines since the events of 2001.”

European airlines are expected to report profits of $1.6 billion, double the previous projection of $0.8 billion.

“While this is a significant improvement, the region’s EBIT margin is expected to be just 1.3%, second lowest after Africa at 0.9%.” Iata said. “Improvements in the Eurozone crisis have stalled in recent months, giving rise to fears of a third false dawn.”

Director general and chief executive Tony Tyler (pictured) said: “This is a very tough business. The day-to-day challenges of keeping revenues ahead of costs remain monumental. Many airlines are struggling.

“On average airlines will earn about $4 for every passenger carried—less than the cost of a sandwich in most places.”

Speaking at the opening of the airline body’s AGM in Cape Town he added: “Generating even small profits with oil prices at $108/barrel and a weak economic outlook is a major achievement. Improved performance is what’s keeping airlines in the black.

“Airlines are putting more people in seats. For the first time in history, the industry load factor is expected to average above 80% for the year.

“And with ancillary revenues topping 5%, it is clear that airlines have found new ways to add value to the travel experience and to shore-up the bottom line.”


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