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IATA upgrades 2010 industry forecast

June 7, 2010, Berlin, Germany – The global airline industry should swing
back to profitability in 2010 after several difficult years as growth
in Asia and North America offsets weaker demand in Europe, a leading
international air transport group said Monday.

Profits are expected to reach US$2.5 billion, the International Air Transport Association said, a vast improvement from the US$2.8 billion total loss it predicted three months ago.

"The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated,'' IATA chief executive Giovanni Bisignani told reporters in Berlin.

The industry saw revenues drop by US$80 billion or 15 per cent in 2009 amid the crisis, and the IATA initially believed three years or more would be needed to recover.

Bisignani now expects "a strong rebound of air traffic.''

International passenger traffic is forecast to grow by seven per cent to a total of 2.4 billion passengers in 2010. The forecast for cargo growth was revised sharply upward, from 12 per cent in March to 18.5 per cent.

Europe, however, remained a striking weak spot with the IATA anticipating a US$2.8-billion loss for airlines there — worse than the US$2.2 billion previously predicted. Europe's feeble growth, strikes at some airlines, the eurozone debt crisis and the volcanic ash cloud that caused major disruptions this spring are hampering
the recovery, according to the IATA.

"Europe is lagging behind,'' Bisignani said.

North American carriers, which sharply cut capacity amid the economic crisis, are expected to earn US$1.9 billion in 2010 — a turnaround from the previously predicted loss of US$1.8 billion, and the US$2.7 billion that carriers lost last year.

Asian airlines are expected to earn US$2.2 billion this year, powered by strong growth across the region.

The level of first- and business-class travellers is back to pre-recession levels, giving airline profits a boon, the IATA said.

The IATA predicted a total revenue of US$545 billion.

Wolfgang Mayrhuber, chief executive of German carrier Lufthansa, speaking alongside Bisignani, said he was looking forward to the conclusion of an agreement on a single European sky, which would be a boon both for air carriers and the environment as airlines would have to fly fewer detours and could reduce C02 emissions by some 12 per cent.

For the European airlines, the latest source of discord with regulators was the volcanic ash cloud that spewed from an Icelandic volcano this spring — forcing a controversial shutdown of much of Europe's airspace for several days in April and causing sporadic disruptions last month.

The IATA has estimated the total impact on airlines' revenue of the ash cloud at US$1.8 billion.