"IATA raises 2007 airline profit forecast to $3.8 bln"

Wednesday, April 4, 2007

IATA raises 2007 airline profit forecast to $3.8 bln 


SINGAPORE (Reuters) - Global airlines are expected to earn a collective
profit of $3.8 billion in 2007, up from a previously forecast $2.5 billion,
due to improving traffic and efficiency, the International Air Transport
Association (IATA) said on Wednesday.
 
Geneva-based IATA said in a statement that industry profit could double to
$7.6 billion in 2008 from 2007, reflecting faster growth in the United
States and slightly lower oil prices.

"Improvement was driven by better-than-expected traffic coupled with careful
control of capacity, boosting load factors significantly," it said.

It also warned that, while oil prices had risen back above $60 a barrel and
U.S. economic growth was slowing, airlines have not used rising revenues to
accumulate enough cash to protect them from shocks, such as economic
recessions.

It said airlines' returns remained low.

"Not only are returns low but balance sheets remain fragile."

IATA, whose member airlines make up 94 percent of international scheduled
air traffic, said European airlines would contribute $2.4 billion in profit
to its 2007 forecast, while carriers in the Asia Pacific region would add
$1.7 billion.

Airlines in North America, which have suffered years in the red, are set to
suffer a loss of $600 million this year. However, adjusted for restructuring
expenses they would turn in a profit of $4.4 billion.

IATA'S estimate for the industry's net loss in 2006 was unchanged at $500
million.

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