IATA Lowers Industry Outlook

The International Air Transport Association (IATA) has lowered its 2013 global industry outlook by eight per cent, or $1bn, down to $11.7bn of net airline profit. "Overall, the story is largely positive. Profitability continues on an improving trajectory. But we have run into a few speed bumps. Cargo growth has not materialised. Emerging markets have slowed. And the oil price spike has had a dampening effect. We do see a more optimistic end to the year. And 2014 is shaping up to see profit more than double compared to 2012," said Tony Tyler, IATA's Director General and CEO. Brent oil prices are expected to average $109 per barrel (pb) for the year, $1 more than expected. However, jet fuel prices have dropped $1 lower than forecast to $126pb. IATA said that the crisis in Syria has led to a drop in demand for fuel, not an increase in cost. It added that the net impact on the overall fuel bill is expected to be neutral. IATA forecasts that this year airlines will post a 3.2 per cent operating margin, the same as in 2006. This is despite net GDP growth of two per cent, a rate at which airlines are expected to post losses. Passenger growth is pitched at five per cent, just down from the 5.3 per cent previously forecast. The aviation body lowered its expectations for cargo from 1.5 per cent to 0.9 per cent growth.

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