Global Airlines Fly Into 2011 As Oil Prices Near $100/bbl

摘要

The prospect of $100 oil poses the biggest challenge to nascent airline profitability as 2011 gets under way. Just a few weeks ago oil prices were widely expected to stay in the $85 per barrel range and IATA was projecting some slippage in net profits for the global airline industry to $9.1 billion this year. That compares with a forecast of $15 billion in net profits for 2010 (JFI Sep.6,p1). Higher jet fuel prices would put a squeeze on an operating margin of 5% that IATA says was "not as good as the late 1990s but better than the previous cycle peak in 2007." The positive result for 2010 represents the start of another airline profit cycle following two years of losses totaling nearly $26 billion during the recession of 2008-09. IATA's financial forecast issued late last year says that airline profit cycles typically last 7-10 years from peak to peak, and that "2011 may see smooth upward progression being interrupted as oil and jet fuel prices rise and [as] some economies in Europe look set to be driven back into recession by debt crises." Those downside risks are appearing to mount as January draws to a close.