PASSENGER DEMAND STRONGER THAN ANTICIPATED, SAYS IATA

KUALA LUMPUR, Sept 20 (Bernama) -- The International Air Transport
Association (IATA) has revised upwards the industry's profit expectations to
US$6.9 billion, up from US$4 billion projected in June on better global growth.

It said despite the improvements, profitability at these levels was still
exceptionally weak (1.2 per cent net margin), considering the industry’s total
revenue of $594 billion.

In its first look at 2012, IATA is projecting profits to fall to US$4.9
billion on the revenue of US$632 billion for a net margin of just 0.8 per cent.

“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,” IATA director-
general and chief executive officer Tony Tyler said today.

“But we should keep the improvement in perspective. The US$2.9 billion
bottom line improvement is equal to about a half a per cent of revenue. And the
margin is a paltry 1.2 per cent. Airlines are competing in a very tough
environment. And 2012 will be even more difficult,” said Tyler.

IATA’s forecast is built around global projected GDP growth of 2.5 per cent
in 2011 falling to 2.4 per cent in 2012.

Airlines financial performance is closely linked to the health of world
economies. Whenever GDP growth slowed below two per cent, the airline industry
losses money.

“We will be perilously close to that level at least through 2012. The
industry is brittle. Any shock has the potential to put us in the red,” added
Tyler.