Opinion NEWS

Global airlines to return to a profit in 2010 except in Europe

By amarendra bhushan for CEOWORLD Magazine Updated:June 7, 2010

Global airlines will turn a $2.5 billion profit this year, reversing two years of losses. The profit would be the industry’s first since 2007, Europe is the only region still forecast to lose money in 2010.

The outlook marks a sharp improvement on the industry body’s previous forecast, released in March, which was for a loss of $2.8 billion, and underscores how much demand for air travel has improved in the past few months. Industry revenue are seen rising 13% to $545 billion.

The International Air Transport Association said it now expects airlines to earn $2.5 billion, up from its March forecast of $2.8 billion in losses. European airlines will still lose $2.8 billion, IATA said, because of ash cloud effects.

“The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated. Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black,” IATA CEO Giovanni Bisignani said in a statement.

German flagship carrier Lufthansa (LHAG) said passenger numbers were improving, but yields on both long-haul and short-haul flights were still below the year-earlier level.

While carriers in Asia, North America, the Middle East, Latin America and Africa were all expected to return to profit, the I.A.T.A warned that net profit margins would remain razor-thin at just 0.5 percent.

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