Airlines confident – but at a price

According to the International Air Transport Association (IATA), confidence in profitability for 2011 remains positive, but has declined since October.

46% of CFO’s expect an increase in profits over the next 12 months compared to 60% in October.

Confidence in travel and cargo remain strong, with 77% expecting increasing passenger volumes and 60% expecting increasing cargo volumes.

However, the CFO’s expect unit costs to increase significantly, with confidence in the ability to raise yields falling sharply.

Higher fuel costs are a reality, so while volumes will look good a fall in profits is expected, from an estimated $15.31 billion last year to $9.1 billion in 2011.

Sounds like a case of two steps forward and one step backwards. Still, it is encouraging to see that the carriers are expecting to carry more passengers.

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January 25th 2011

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