Airlines Set to Turn Big Profit in 2010

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The recession really is over, at least for airlines.

The International Air Transport Association, an industry trade group, announced Tuesday that it projects the global airline industry will make $8.9 billion in profits this year, thanks to increased demand, lower prices of jet fuel and an increase in the cost of airfare.

By comparison, the airline industry actually posted a $9.9 billion loss in 2009 and has not generated a profit since 2007, before the recession fully kicked into effect.

"The industry recovery has been stronger and faster than anyone predicted. The $8.9 billion profit that we are projecting will start to recoup the nearly $50 billion lost over the previous decade,” said Giovanni Bisignani, IATA’s CEO, in a press release.

In particular, the association noted that consumer demand for flying increased by 11% this year, yet there are fewer flights available, meaning that airlines can fill more seats and charge more of a premium.

Earlier this week, the Bureau of Transportation Statistics released its own report that also highlighted increased airline profits. This report found that the major domestic airlines posted a combined $3.09 billion in profits in the second quarter, much of which came from extra fees.

“As part of their second-quarter revenue, the airlines collected $893 million in baggage fees and $594 million from reservation change fees from April to June,” the report found.

However, airlines may still have some turbulence ahead. The IATA predicts that airlines will make a smaller profit next year of about $5.3 billion.

According to the report, “The impact of the post-recession bounce from re-stocked inventories will dissipate. Consumer spending is not expected to pick-up the slack as joblessness remains high and consumer confidence falls in Europe and North America.”

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