Headwinds, high rent and new ground
In the first of a two-part series, the Post examines how the aviation, retail and telecoms sectors fared in 2012 and what fortune awaits them in 2013
Soaring fuel prices and sluggish demand in the United States and the euro zone sapped the performance of global airlines in 2012, which face more headwinds in the new year.
High fuel prices, which have averaged nearly US$130 per barrel for the past two years, have become a "fact of life" for the airline business, says Tony Tyler, director-general and chief executive of the International Air Transport Association, an airline trade group with more than 230 members worldwide.
Factor in high fuel costs combined with slow passenger growth and stagnant cargo demand in 2012, resulting in thinner profit margins for global airlines, and forecasts from Iata are that once final accounting is done, the industry is likely to have generated total earnings for the year of US$6.7 billion at a net margin of just 1 per cent.
Next year, the operating environment will be slightly better, partially due to ongoing restructuring and consolidation in the industry. Forecasts are that net profit will grow to US$8.4 billion, more than last predicted although still short of the US$8.8 billion last year.
Home-grown carrier Cathay Pacific Airways did not escape unscathed last year, and is banking on higher cargo demand for a better 2013.