Geneva - Downward pressure on airline industry profits start to ease, as governments and the ECB move to support growth and oil supplies get a boost, according to a report published today by the international Airline Transport Association (IATA).

The report points out that there is no material change in time for 2012 business environment, which remains tough, but airline performance has improved - evidence that consolidation is working.
As a result, IATA has upgraded forecast for 2012 industry post-tax profits to $4.1 billion, up from June's $3 billion forecast.

Europe remains under pressure, due to recession in many economies, and expect airlines in this region to lose $1.2 billion this year.

A contrasting performance is evident in North America where, as a result of tight capacity management, airlines are expected to improve performance this year with an upwardly revised $1.9 billion profit.
Weak cargo markets have sharply cut profits in the Asia-Pacific region but the passenger business has been robust and is being revised upward with forecasts for this region to $2.3 billion.

Risks have diminished a little but are still high, with further to go before problems in the Eurozone, the US budget and oil markets are resolved;

But on the basis that these risks do not materialise this year or next, the first look into 2013 suggests a slightly better business environment, with oil prices a little lower and economic growth moderately faster.
In this environment we anticipate an increase in airline profits to $7.5 billion, with Asia Pacific the strongest region, but of course in a $660 billion industry this is a tiny margin and far from enough to meet the cost of capital.