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Published: Tuesday, 6/8/2010

Airlines forecast first profit since '07

MARKETWATCH

LONDON - Airlines are expected to collectively return to profit in 2010, a year earlier than expected, thanks to the industry's cost-cutting efforts and a nascent recovery in demand for air travel, a leading industry body said.

The International Air Transport Association expects airlines to post a profit of $2.5 billion this year, a sharp improvement on its previous forecast for a loss of $2.8 billion, and the industry's first profit since 2007.

Revenue is seen rising 13 percent to $545 billion.

"The global economy is recovering from the depths of the financial crisis much more quickly than anyone could have anticipated. Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black," IATA Chief Executive Giovanni Bisignani said in a statement.

Average fares are also expected to rise, by 4.5 percent, for both for the passenger and cargo business. Previously, the forecast was for a 2 percent increase in passenger and a 3.1 percent rise in cargo.

There was also good news at the front of the cabin, where carriers make most of their profit. The association said yesterday that demand for premium travel appears to be recovering cyclically in many regions.



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