The global airline industry is likely to post a net profit of $6.7 billion during 2012. This is likely to grow to a net profit of $8.4 billion in 2013, the International Air Transport Association (IATA) announced on Thursday.

The latest data for 2012 are $2.6 billion upgrade from what IATA had predicted in October this year.

According to IATA, improved prospects for 2012 are being driven by airlines’ strong performance in the second and third quarters and also the performance of growing economies such as India, China and Latin America.

Releasing the latest data, IATA Director General Tony Tyler said that after an expected $637 billion in revenues, a net profit of $6.7 billion or a net profit margin of one per cent this year, this figure will rise to a net profit margin of 1.3 per cent next year.

“While that may sound large, we must realise that it is a shift equal to less than a half per cent of revenue. Things are moving in the right direction. But the positive shift is not moving airlines anywhere near the 7-8 per cent that will be needed to cover the industry’s cost of capital,” Tyler said at IATA’s Global Media Day event in Geneva.

After a two-year decline, a small rise in air freight volumes is also expected in 2013 and it is forecast that passenger numbers will continue to increase moving above the three billion mark in 2013, IATA Chief Economist, Brian Pearce said.

IATA officials added that another reason for the better performance of the industry is action by airlines to cut costs and their better than expected financial performance.

“US airlines continue to improve their profitability, while the Asia-Pacific is a mixed picture although overall profitability has not deteriorated as much as we had expected despite the weakness of the cargo market. Even in Europe, performance has improved and we expect the region to break even,” an IATA official said.

>ashwini.phadnis@thehindu.co.in

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