Middle East carriers to record $400m profit

21 September 2010

Carriers were expected to post losses of $400m

Middle East airlines are forecast to make a total profit of $400m in 2010, an increase on the previous estimate of $100m.

The increase is attributed to strong regional economies and carriers in the Middle East are gaining market share on long-haul routes. Capacity has also been added at a slower pace than demand growth in 2010, which has raised load factors and helped profitability, says Giovanni Bisignani, director general and chief executive of Geneva-based International Air Transport Association (Iata).

In June, Iata forecast a profit of $100m for the region’s carriers. This was a vast improvement on Iata’s initial figures that showed regional airlines would make a $400m loss in 2010 (MEED 11:3:10).

In 2011, Iata expects Middle East airlines to make a profit of $300m.

Globally, airlines are now expected to make a profit of $8.9bn, which is a huge leap from original forecast of $2.5bn. The rise is because of a large increase in global demand and that airlines are handling capacity more effectively.

Bisignani says that 2010 is “as good as it gets” and airlines in all regions will see a drop in profits in 2011.

“The durability of this upturn is in increasing doubt in North America and Europe. Certainly the initial impetus from business inventory building and fiscal stimulus has ended, if not gone into reverse. Growth will slow in 2011,” Bisignani says. “Unfortunately this is likely to coincide with increasing capacity as new aircraft deliveries rise and fleet utilisation recovers.”

In 2011, profits for airlines worldwide look likely to fall to $5.3bn.

Carriers in Asia-Pacific are now forecast to make a profit of $5.2bn this year up from $2.7bn due to a 33 per cent improvement in cargo traffic to the region and a 23 per cent rise in intra-Asia business travel.

Europe is the only region which is still in the red and its airlines are tipped to make a loss of $1.3bn in 2010. European carriers are likely to break even in 2011.

In other regions, North American carriers are expected to make a profit of $3.5bn, Latin American airlines will make a profit of $1bn and airlines in Africa will post profits of $100m.

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