Airlines: 2013 profits to rise thanks to cost cuts

(AP) Airlines' profits will improve to $8.4 billion in 2013, mainly reflecting cost cuts and restructuring measures taken to compensate for stalling economic growth, the global industry's trade group forecast Thursday.

For 2012, the industry anticipates net profits of $6.7 billion based on strong second and third quarters particularly for larger carriers with bigger economies of scale despite high fuel prices and weaker demand.

But the 2013 results would still be below the $8.8 billion earned in 2011 and $15.8 billion in 2010. The net profit margin, at 1 percent, would also be well below the 7 to 8 percent officials say is needed to recover capital costs.

The International Air Transport Association's annual review focused on the impact of annual world economic growth falling below 2 percent and Brent crude oil trading at $109.5 a barrel.

Airlines have adjusted to this difficult environment through improving efficiency and restructuring, said Tony Tyler, chief executive of the Geneva-based global trade group.

Tyler told reporters in Geneva that airlines' financial performance hinged partly on their size.

Economies of scale are helping larger airlines to cope much better with the difficult environment than small and medium-sized carriers which continue to struggle, he said.

IATA, whose 240 member airlines carry 84 percent of all passengers and cargo, said the industry's overall revenue in 2013 is expected to rise to $659 billion from $637 billion this year, while costs will go up to $640 billion from $623 billion.