Iata forecasts big profits for 2007

KEVIN MAYHEW THE INTERNATIONAL Air Transport Association (IATA) predicts that airlines will post profits of US$7.7bn (R48.5bn) in 2007 – which will be a vast improvement on the projected $US2.2bn (R13.8bn) loss in 2006. Iata’s director and CEO, Giovanni Bisignani, said that this quarterly revision was an improvement on losses of $4.3bn (R27bn) in 2006 and profit of only $6bn(R37.8bn) in 2007. “There is a new optimism emerging in the industry. Improved economic prospects in Europe and Asia combined with an improving situation in the US will lead to reduced losses in 2006 and strengthened profitability in 2007. “A profit of $7.2bn (R45.3bn) would still only be a three percent return on capital investment,” he said. Bisignani did not break down the profitability of passengers and freight in achieving these figures. The emerging optimism in the industry is confirmed by the launch results of IATA’s Airline Business Confidence Index. Among chief financial officers surveyed, 52.5% saw an improvement in profitability for the period November 2005-January 2006. For the 12-month period from February 2006, 69.5% of CFOs expected improving profitability.