Asia-Pacific airlines to see sharp fall in profit
Industry body blames weak cargo market and slowdown in China for expected 44 per cent drop in earnings to US$3 billion this year
Carriers in the Asia-Pacific will see their profits fall 44 per cent this year because of the weak cargo market and the slowdown in China, the International Air Transport Association said yesterday.
The airline trade body has revised up the profit forecast for the airlines across the globe by 63 per cent to US$6.7 billion. Most of the gains came from the European carriers, which saw stronger-than-expected traffic in the second and third quarters.
Asia-Pacific airlines, including Cathay Pacific Airways, Korean Air and China Airlines, however, are still bogged down by the sluggish cargo demand from the West.
Cathay, for example, would generate 30 per cent of its revenue from the cargo division in previous good years. The carrier last month flagged a profit warning for its full-year earnings result, saying it would be "disappointing" because of falling cargo and passenger traffic.
Asian-Pacific carriers are expected to post a net profit of US$3 billion this year, down from US$5.4 billion last year - the largest drop in absolute value ever in the sector.
Industrywide net income for the year should reach US$6.7 billion, against a forecast of US$4.1 billion in October, Iata said. Profit next year might increase to US$8.4 billion - US$900 million more than last predicted although still short of the US$8.8 billion last year.
Sluggish growth and fuel costs have weighed on earnings for the past two years, triggering efforts to reduce capacity, cut costs and accelerate consolidation.