Airlines set to return to profit in 2007

The global airline industry is expected to be back in the black for the first time in six years in 2007, reveals IATAs director general and CEO

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The global airline industry is expected to be back in the black for the first time in six years in 2007, IATA’s director general and CEO, Giovanni Bisignani has revealed.

“We are looking at a marginal profit of around US $1 billion [for 2007],” he said in Dubai last month. “For an industry with $450 billion revenue, that’s a low figure and I am not cracking open the champagne, but we are moving in the right direction.”

Back in June, IATA estimated $3 billion losses for the year, based on an oil price of $66 per barrel (Brent) and a total fuel bill of $112 billion. This was later revised to US $1.7 billion, taking into account a fuel bill of $115 billion and calculated according to an average oil price of $68 per barrel (Brent).

Bisignani said the industry’s annual fuel bill would still stand at $115 billion in 2006.

He attributed the gains made to improved efficiency across the board. “Labour productivity has improved, distribution costs have improved and new planes are more efficient. The industry is now lean and ready for profitability,” he said.

But he warned that the combination of the “US-led economic slowdown” predicted for 2007, terrorism threats and Middle East instability, could threaten profitability.

Bisignani also called on governments worldwide to help create a “harmonised set of rules” that would liberalise the skies and enable the airline industry to operate in a free market.

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