Airlines Seen Booking $2.5B Profit in 2010

Airlines are expected to post global profits of $2.5 billion in 2010, the International Air Transport Association said Monday, reversing its previous forecast of a $2.8 billion loss.
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BERLIN (

TheStreet

) -- Airlines are expected to post global profits of $2.5 billion in 2010, the International Air Transport Association said Monday, reversing its previous forecast of a $2.8 billion loss.

Industry revenue is forecast to be $545 billion in 2010, up from $483 billion in 2009, but still below the $564 billion achieved in 2008, IATA said.

"The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated," said Giovanni Bisignani, IATA's CEO. "Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black. We thought that it would take at least three years to recover the $81 billion (14.3%) drop in revenues in 2009. But the $62 billion top-line improvement this year puts us about 75% on the way to pre-crisis levels."

Bisignani said however that the profit forecast "represents a net margin of just 0.5%, which is a long way from sustainable profitability." He also said European carriers were still struggling with an anticipated loss of $2.8 billion because of strikes, natural disasters and currency woes.

IATA forecasts passenger traffic to grow by 7.1% in 2010 and cargo traffic to expand by 18.5%, better than previous forecasts of 5.6% and 12%, respectively. Yields are now forecast to grow by 4.5% for both the cargo and passenger business, IATA said.

Asia-Pacific carriers are expected to deliver the largest profit at $2.2 billion, IATA said.

-- Reported by Joseph Woelfel in New York.

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