Kevin O'Toole/GENEVA
THE international airline industry could be on course to turn in the highest profits in its history if over-capacity continues to decline, according to predictions from the International Air Transport Association (IATA).
IATA estimates that its members made a net profit of $1.8 billion on their international operations in 1994, the first positive result in five years.
Provided that traffic again runs ahead of capacity, IATA forecasts that the industry could turn in profits of $5.5 billion this year.
"We've never seen numbers like that in our industry. It would be the best figure we've ever achieved," says IATA director-general Pierre Jeanniot, admitting that the forecast is entering uncharted waters.
Even with the improvement, he warns that the industry is far from achieving adequate returns. The net return on sales for 1994 was little over 1% and the "optimistic" forecast for this year would only raise that figure to 5% says Jeanniot. He adds that investors would normally expect a return of three times that figure. "What could be our best year in many years is still insufficient," he says.
Jeanniot also warns that the recovery could still be jeopardised if capacity is allowed to expand faster than traffic, reversing a two-year improvement in load factors.
IATA's forecast for 1995 is based on international traffic rising by around 1.5% ahead of capacity. That would help unit costs again fall 1-2% faster than yields as they did in 1994.
Overall results for the IATA airlines, including domestic and non-airline operations, have also showed recovery in 1994, swinging back to just above break-even with a net profit of $100 million. Over the previous four years, the airlines collectively, lost $20 billion.
Source: Flight International
