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Global air industry sees profit, warns on Europe

Global air industry sees profit, warns on Europe
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First Published: Mon, Jun 07 2010. 02 33 PM IST
Updated: Mon, Jun 07 2010. 02 33 PM IST
Berlin: Global airlines banished two years of economic misery with an abrupt turnaround in industry forecasts on Monday, though they were laced with a strong note of caution on Europe’s carriers.
The International Air Transport Association said it now expects global airlines to report a $2.5 billion profit this year, an improvement of more than $5 billion from its forecast of a loss just three months ago.
IATA chief executive Giovanni Bisignani said the global economy was improving more quickly than anyone expected, boosting traffic and yields sharply — something unthinkable even two months ago during Europe’s volcanic ash crisis.
But Europe, mired in bad debts and bad feelings from flight cancellations during the ash crisis, is expected to lag the turnaround — particularly if a summer of strikes paralyses air travel.
IATA most recently predicted worldwide industry losses of $2.8 billion in 2010, as airlines cut prices to fill seats. It said on Monday that Europe is still expected to lose that amount this year, almost 30% more than its forecast in March.
The global upturn is expected to be the highlight of the opening of IATA’s annual meeting and comments by executives bore that out.
German flagship carrier Lufthansa said Monday passenger numbers were improving, but yields on both long-haul and short-haul flights were still below the year-earlier level.
LAN CEO Enrique Cueto told Reuters on Monday his airline was optimistic based on June traffic figures so far.
Building Buzz
The general note of industry optimism could spread to planemakers represented at the Berlin Air Show to be held back to back with the IATA summit. A regional event usually dwarfed by the larger Paris and Farnborough air shows, the 8-13 June show could come into its own this year.
John Leahy, sales chief at Airbus, a unit of the aerospace and defence group EADS, told Reuters he would be unveiling deals at the show, but declined to elaborate. There has been speculation that industry heavyweight Emirates, the top Airbus customer, could be bulking up its fleet soon.
Meanwhile, the chief executive of Boeing Commercial Airplanes told Reuters on Monday the planemaker was working on a number of deals to sell 777 and 787 long-haul aircraft.
But, as so often with the airline industry, the good news is tempered with more bad news.
In total, about 700 delegates representing more than 100 airlines are at the meeting, which is likely to also focus heavily on the industry’s response to Iceland’s volcano.
Strikes in Europe and unrest in Asia could add to the woes.
British Airways is in the midst of a series of cabin crew walkouts, and labour unrest looms at Lufthansa.
BA chief executive Willie Walsh, in Berlin despite being taunted by union leaders for not staying to negotiate an end to the bitter dispute over conditions, roundly criticized the Unite union that represents the cabin staff.
“They have failed in their efforts and they will continue to fail” to shut down the airline, Walsh told Reuters on the sidelines of a Oneworld airline alliance presentation.
Walsh also said there was no trade-off point for the airline between the cost savings it has made from cuts and the ongoing costs of the strike itself.
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First Published: Mon, Jun 07 2010. 02 33 PM IST
More Topics: Airlines | IATA | Lufthansa | Aviation | Ash Cloud |