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IATA: 2011 will be harder than 2010

Airline profit margins still 'pathetic', according to industry body.
The head of the global aviation body says the industry is still failing to make enough money.
The head of the global aviation body says the industry is still failing to make enough money.

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The global aviation industry will make a net profit of US $15.1 billion this year (up from the $8.9 billion forecast in September), according to the International Air Transport Association (IATA).

The Association also revised upwards its projections for 2011 to a net industry profit of $9.1 billion (up from the $5.3 billion forecast in September).

Despite this return to profitability, IATA is still sounding a few notes of caution.

Profits as a proportion of revenue remain low, there are huge variations in performance between regions and higher costs will make it harder to make money in 2011.

Net margins will be around 2.7% in 2010, falling to 1.5% in 2011.

“Our profit projections increased for both 2010 and 2011 based on an exceptionally strong third quarter performance,” said Giovanni Bisignani, IATA’s director general and CEO.

"But despite higher profit projections, we still see the recovery pausing next year after a strong post-recession rebound. And the two-speed nature of the recovery is unchanged with European airlines continuing to underperform other regions.

“Margins remain pathetic. With a 2.7% net margin in 2010 shrinking to 1.5% in 2011, we are nowhere near covering our cost of capital. The industry is fragile and balancing on a knife edge. Any shock could stunt the recovery, as we are seeing with the results of new or increased taxation on airlines and travelers in Europe.”

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