Industry association IATA today raised its forecast for airline earnings in 2010 to a record $15.1 billion as economic conditions improved but warned that profits would slide next year.
The forecast profit marked a significant step up from the previous figure of $8.9 billion in earnings expected this year. Two-thirds of 2010's expected profits were generated in the second quarter, the International Air Transport Association said.
But it signalled more turbulence for airlines in 2011 with profits dropping back to $9.1 billion.
'The recovery cycle will pause in 2011,' director general Giovanni Bisignani said. 'Although the $9.1 billion profit projection for 2011 is better than we had previously forecast, next year the industry will face tougher conditions than what we are experiencing today,' he said.
Fuel prices are expected to average $84 a barrel next year, up from $79 in 2010. In addition, an ongoing debt crisis in Europe is expected to stifle growth in industrialised markets. The IATA predicted further spending cuts by governments which will further depress economic growth.
Profits for the region's carriers are estimated at just $100m in 2011. 'Europe is really the sick region of the world - not just sick in aviation, it's sick in the system,' said Bisignani.
Growth is largely going to come from fast-growing Asia, which will post more than half of the 2010 profit at $7.7 billion. 'This is the largest absolute profit ever for this region. The power of China is driving this forward,' Bisignani said.
Asia is also forecast to post $4.6 billion in earnings in 2011, half of next year's profit. Bisignani noted that the economic crisis has accelerated the shift of the 'industry's centre of gravity to the East.'
At $20 billion, Air China is now the largest airline in the world by market capitalisation, the IATA chief said. Singapore Airlines is next with $14 billion, followed by Hong Kong's Cathay Pacific at $12 billion. Delta and Lufthansa are worth $10 billion each by market capitalisation.
By 2014, IATA sees 800 million more people travelling, including 360 million who will be flying within the Asia Pacific region.
IATA represents some 230 carriers that account for more than 90% of scheduled air traffic globally but does not include many of the big budget airlines.
