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Thu, Mar 23, 2006

IATA Forecasts Lower Losses In 2006 -- And A Profit For 2007

Would Be First Global Airline Profit In Six Years

Hang in there, guys... because it's going to get better soon. Probably.

That's the word from the International Air Transport Association to airlines around the world, after stating it expects a larger profit in 2007 than it had previously anticipated.

The global airlines body raised its forecast for an industrywide profit -- the first in six years -- to $7.2 billion in 2007. That's up from $6.2 billion previously, IATA Chief Executive Giovanni Bisignani (right) said Wednesday.

That's also far better than the expected $2.2 billion is losses the industry is expected to have to bear in 2006. Although that figure is half of the amount IATA originally projected for 2006, it is still a less-than-rosy outlook for the rest of the year.

Most of the projected loss in 2006 comes from expected losses among US carriers of $5.4 billion, which are expected to lessened in 2007 by leaner operations. The projections also assume that crude oil costs will stay around $57 per barrel this year, and will drop to $52 per barrel for 2007.

Reuters reports Bisignani warned industry bigwigs and analysts alike against unfounded optimism over the profit projections, as expected profits would still be too small to absorb another worldwide crisis -- such as another surge in fuel costs, a terrorist attack, or a global bird flu pandemic.

"There are some wild cards beyond our control -- avian flu and security among them," Bisignani said. "If we are looking for a common villain, it is fuel."

Still... after years of weathering financial turbulence, Bisignani said any profit at all is cause to cheer -- albeit quietly.

"I believe there is a new optimism in the industry," Bisignani said.

FMI: www.iata.org


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