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Airlines have chance to profit this year
Improving passenger statistics have given airlines a glimmer of hope, says IATA and could see many airlines break even or better in 2004.
The latest statistics show passenger traffic is up 20% on last year for the first half of 2004. This outstrips capacity growth of 13.2%, which means passenger load factors (percentage of available passenger seat kilometres used) are up to 73% for the first half of the year.
The price of oil continues to put a strain on airlines. If it remains at present levels – $6 above the anticipated price per barrel, then it will rack up $6 billion in costs for the industry.
But according to IATA, if airlines can continue to manage costs, they could emerge in better shape by the end of the year.
IATA director general and chief executive, Giovanni Bisignani said: “The industry’s traffic performance in recent months is impressive. If airlines can maintain strict control on their costs and capacity, the strong traffic recovery for this year could see the industry break even or better.”
One US airline provided evidence of improving fortunes this week when it released promising results, but it came with a warning. US Airways posted a quarterly net profit of USD$13 million, in traditionally its strongest quarter. But the airline predicted more losses in the second half of the year.
US Airways has recently emerged from Chapter 11 bankruptcy and said it continues to come under pressure from low fares competitors.
Report by Ginny McGrath
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