IATA WARNS SHRINKING PROFITS FOR MIDDLE EAST CARRIERS

Dino D'Amore
By Dino D'Amore December 19, 2010 11:52

IATA WARNS SHRINKING PROFITS FOR MIDDLE EAST CARRIERS

The International Air Transport Association (IATA) stated last week that Middle East carriers “are expected to see 2010 profits of $700m shrink to $400m in 2011,” as the fragile global aviation industry continues to flounder.

Even so, Middle East airlines will continue to grow much faster than western airlines, says IATA: [The Middle East] will be the fastest growing region in both 2010 and 2011. But the pace of demand growth will halve from 21.5% in 2010 to 10.5% in 2011.”

European airlines were described as playing the “industry laggard” to airlines such as Etihad and Emirates, with their profits expected to shrink to $100 million in 2011 from $400 million the previous year, due to the continuing depressed economic situation.

“What is disappointing is Europe with a $400 million profit,” said Giovanni Bisignani, IATA’s director general and CEO, in a speech last week. “Their surprisingly strong third quarter performance turned the earlier forecast net loss into profit. But at $400 million, it is really peanuts.”

He adds: “The European industry is 13 times the size of Africa. But profits are just four times larger than the $100 million that Africa’s carriers will make.”

The report said the European airline market will remain “depressed as a result of the debt crisis, slow economic growth, government austerity measures and increasing taxation”.

Bisignani warned against the industry-wide optimism that had grown throughout 2010, saying that even though the profit of $15.1 billion is certainly “good news for an industry that lost $51bn between 2001 and 2009, but let’s put that good news into perspective,” he said.

Dino D'Amore
By Dino D'Amore December 19, 2010 11:52
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