Cargo markets stabilized at low levels in the fourth quarter of 2011. The pattern of rising sea freight and low level of air cargo is linked to Asian economies buying bulk commodities while Western consumer confidence is weak. Reduced pessimism among purchasing managers is expected to support a moderate upturn in air cargo during the second half of the year.
Looking at regional performance, Iata noted that all regions will see reduced profitability in 2012 compared to 2011, and Europe and Africa will see losses.
European carriers by far face the most difficult situation among the regions. The outlook remains unchanged from December with the expectation of a US$600-million net loss. While it appears that a major worsening of the Eurozone crisis has been averted, many European economies are in deep recession which will see continued weakness in both the cargo and passenger business. At the same time air travel is being hit by taxation and the cost of the European Union’s emissions trading system (EU ETS).
African carriers are still expected to see losses of US$100-m, unchanged from the previous forecast. Some of the region’s economies are growing strongly and generating expanding demand for air transport. However, freight load factors (percentage of capacity taken up by revenue-generating cargo) are very low on average for airlines in this region which will make it difficult to recover the rise in fuel costs.
North American carriers are expected to deliver a profit of US$900-m, down from the previously forecast US$1.7-bn. Higher fuel costs are responsible for the downgrade, but airlines in this region will see the smallest deterioration from last year’s performance among the major regions, as a result of the very small increases in capacity expected.
Asia Pacific carriers continue to perform well. Better than expected performance in 2011, particularly by the Chinese carriers - saw an upward revision of 2011 profits to US$4.8-bn (from the previous estimate of US$3.3-bn). For 2012, the region’s airlines are expected to again deliver the largest absolute profit - US$2.3-bn - which is US$200-m more than estimated in December. Higher fuel costs will more than halve profits this year but the region’s relatively strong economies will continue to generate more rapid growth in travel and cargo than the other large regions.
Middle East carriers are expected to see profits of US$500-mn (up from the previously forecast US$300-m).
Latin American profits are expected to be US$100-m, unchanged from the previous forecast. Performance is mixed across the region, but intense competition in some major markets and slowing economies will make it more challenging for the region’s airlines to recover the increase in fuel costs they face this year.
