13 Dec 2013

Airline industry profits expected to reach $19.7b in 2014

7:21 am on 13 December 2013

The International Air Transport Association says profits for the global airline industry will reach a record $19.7 billion in 2014.

The BBC reports the prediction is an upgrade on IATA's previous forecast of profits of $US16.4 billion.

The organisation said in Geneva that cost cutting, cheaper fuel and rising demand for travel were factors behind the upgrade.

IATA also upgraded its profit estimate for this year to $US12.9 billion from an earlier estimate of $US11.7 billion. However, profit margins were being squeezed.

IATA said next year's estimated profit of $19.7 billion would come from predicted revenues of $US743 billion whereas the previous record profit figure of $US19.2 billion in 2010 - came from revenues of $US579 billion.

"It is a tough environment in which to run an airline,'' said chief executive Tony Tyler. ''Competition is intense and yields are deteriorating.

"Cargo volumes haven't grown since 2010 and cargo revenues are back at 2007 levels. The passenger business is expanding more robustly."

Mr Tyler added that airlines would make a net profit of only about $US5.94 per passenger in 2014.

IATA represents 240 airlines which carry 84% of total air traffic.