Middle East carriers are expected to make a profit of $800m in 2011, a leap from the $100m expected in June, according to the Montreal-based International Air Transport Association (Iata).
Despite potential demand shocks associated with the political instability in the region, Middle East airlines witnessed an 8.3 per cent growth in passenger traffic in the first seven months of the year.
Iata has also increased its prediction for global airline profits in 2011 from $4bn to $6.9bn. Airlines in the Middle East saw a 9.7 per cent year-on-year rise in passenger traffic in July (MEED 4:9:11).
“Airlines are going to make a little more money in 2011 than we thought. That is good news. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement,” says Tony Tyler, Iata’s director general and chief executive officer.
“But we should keep the improvement in perspective. The $2.9 billion bottom line improvement is equal to about a half a percent of revenue. And the margin is a paltry 1.2%. Airlines are competing in a very tough environment. And 2012 will be even more difficult,” he adds.
Iata’s forecast depends on a global projected GDP growth of 2.5 per cent in 2011 falling to 2.4 per cent in 2012.
In other regions, North America is expected to record a net profit of $1.5bn while European carriers will achieve a net profit of $1.4bn. Carriers in Asia-Pacific are expected to make $2.5bn, the highest of any region. Latin American carriers will make a net profit of $600m and African carriers will break even with $100m.