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Global airline profits fly high as Cyprus woes weigh on European carriers Global airline profits fly high as Cyprus woes weigh on European carriers
(6 months later)
Airlines are expected to generate improved profits of more than $10bn (£7bn) this year, their global association has forecast, although European carriers could continue to struggle.Airlines are expected to generate improved profits of more than $10bn (£7bn) this year, their global association has forecast, although European carriers could continue to struggle.
The International Air Transport Association (Iata) said there was increased confidence in the industry, but warned that Europe's airlines remained vulnerable from the situation in Cyprus, adding that its forecast was based on the eurozone remaining stable.The International Air Transport Association (Iata) said there was increased confidence in the industry, but warned that Europe's airlines remained vulnerable from the situation in Cyprus, adding that its forecast was based on the eurozone remaining stable.
The $10.6bn profit forecast was up 20% on previous estimates, based on stronger revenues and better cash flows, despite fuel costs staying high, Iata said. It is well above the $7.6bn profit the association estimated had been hit in 2012.The $10.6bn profit forecast was up 20% on previous estimates, based on stronger revenues and better cash flows, despite fuel costs staying high, Iata said. It is well above the $7.6bn profit the association estimated had been hit in 2012.
Asian airlines account for the largest single continental share, generating net profit of $4.2bn. Iata revised up profit forecasts for the region on the back of an expected higher demand for air freight.Asian airlines account for the largest single continental share, generating net profit of $4.2bn. Iata revised up profit forecasts for the region on the back of an expected higher demand for air freight.
For European airlines, the association predicted profits of £533m for 2013, an improved figure but one it described as "barely different from breakeven".For European airlines, the association predicted profits of £533m for 2013, an improved figure but one it described as "barely different from breakeven".
Tony Tyler, the Iata director general, said it was "a small step in the right direction" but considerable risks remain. "European Central Bank commitments with respect to the eurozone crisis and the slow economic recovery in the US should be pointing us towards a durable, if weak, upswing. But we have had two false starts already," he added.Tony Tyler, the Iata director general, said it was "a small step in the right direction" but considerable risks remain. "European Central Bank commitments with respect to the eurozone crisis and the slow economic recovery in the US should be pointing us towards a durable, if weak, upswing. But we have had two false starts already," he added.
"Improving conditions in early 2011 and 2012 disintegrated as the Eurozone crisis intensified. And it could happen again. The impact of the unfolding situation in Cyprus is a risk factor that cannot be ignored.""Improving conditions in early 2011 and 2012 disintegrated as the Eurozone crisis intensified. And it could happen again. The impact of the unfolding situation in Cyprus is a risk factor that cannot be ignored."
Tyler said airlines were dealing with unpleasant "curve balls" from governments, including European proposals for passenger rights legislation, US budget cuts to air traffic management, and anticipated increases to air passenger duty in the UK next month.Tyler said airlines were dealing with unpleasant "curve balls" from governments, including European proposals for passenger rights legislation, US budget cuts to air traffic management, and anticipated increases to air passenger duty in the UK next month.
Airline revenues are forecast to hit $671bn this year.Airline revenues are forecast to hit $671bn this year.
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