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Global airline industry to have profit of $10.6 billion

Staff writer |
The International Air Transport Association (IATA) announced a modest improvement in its outlook for the 2013 financial performance of the global airline industry.

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IATA now expects airlines to produce a combined net post-tax profit margin of 1.6%, up from the previously forecast 1.3%, with a net post-tax profit of $10.6 billion, up from the previously projected $8.4 billion.

"Industry profits are taking a small step in the right direction. Against a backdrop of improved optimism for global economic prospects passenger demand has been strong and cargo markets are starting to grow again. The economic optimism is also pushing fuel prices higher. We are seeing a $12 billion improvement in revenue, and a $9-10 billion increase in costs—most of which is related to fuel," said Tony Tyler, IATA's director general and CEO.

Confidence in the airline industry is rising around several factors. GDP growth forecasts for 2013 have been upgraded to 2.4%, a significant improvement from the 2.1% in 2012. It appears that the bottom of the global industrial production cycle was reached in the third quarter of 2012 after which there has been six months of increasing output and improvements to business confidence.

There is a structural improvement in the airline industry's financial performance as recognized by a 7% increase in share prices since the beginning of the year, despite a 5% increase in fuel costs.

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