Aviation News

2011-06-06

Airlines to See 78 Percent Profit Drop This Year: IATA

More articles by »
Written by: BNO News
Tags: , , ,

The International Air Transport Association (IATA) on Monday further downgraded its 2011 airline industry profit forecast to $4 billion, which would represent a 78 percent drop compared to last year.

profit plummeting

The IATA had initially released an $8.6 billion profit forecast in March, but natural disasters and political unrest have significantly affected a part of the airline industry. A $4 billion profit this year would mean a 78 percent drop from the $18 billion net profit recorded in 2010.

“Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations to $4 billion this year. That we are making any money at all in a year with this combination of unprecedented shocks is a result of a very fragile balance,” said Giovanni Bisignani, IATA’s CEO and Director General. “The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel. But with a dismal 0.7 percent margin, there is little buffer left against further shocks.”

The Association said the cost of fuel is the main cause of reduced profitability, as the average oil price for 2011 is now expected to be around $110 per barrel, a 15 percent increase over the previous forecast of $96 per barrel. For each dollar increase in the average annual oil price, airlines face an additional $1.6 billion in costs.

Fuel is now estimated to comprise 30 percent of airline costs, which is more than double the 13 percent of 2001. “We have built enormous efficiencies over the last decade. In 2001, we needed oil below $25 per barrel to be profitable. Today, we are looking at a small profit with oil at $110 per barrel,” said Bisignani.



About the Author

BNO News





 
 

 

Flying During These Unprecedented Times Of Coronavirus

An airline pilot shares what life has been like flying (and not flying) during the age of COVID-19, along with the uncertainty that lies ahead.
by Jeremiah McBride
0

 
 

Airlines Leading the Way in the Age of COVID

At a time when distancing, cleanliness, and other infection controls are at the forefront, airlines can lead the way in ensuring travelers stay healthy.
by Jeremiah McBride
0

 

 

CLOSED: Winter Storm Stella Takes Aim at Northeastern US and Eastern Canada

Winter Storm Stella is taking aim at the Northeastern United States and Eastern Canada early this week. We'll have your latest updates on the storm and its impact on air travel here.
by NYCAviation Staff
0

 
 

JetBlue Flies Back in Time with Their New “Retrojet”

JetBlue unveiled their new 60's style retrojet last Friday as part of the return of their JFK-Palm Springs service.
by Eric Dunetz
0

 
 

Left Behind by the On-Time Machine

On-time departures are a critical aspect of airline operations and how they are viewed by the flying public. However, is it worth sacrificing passenger satisfaction in some instances in order to stay on time?
by Brad Tate
1

 




  • Anonymous

    $4 billion profit across the entire airline industry?  Wow! It’s clearly not a good business to be in.  One can only wonder who’s going to hold up under these conditions.