[Vancouver Sun] Global aviation is on the runway to earn higher profits from a further increase in passengers in 2013 after demand grew by 5.3 per cent last year and planes flew with near record level of seats filled, an industry association said Thursday.
Passenger demand was below the 5.9 per cent increase set in 2011, but above the 20-year average of five per cent, while load factors for the year were near record levels of 79.1 per cent.
“We are entering 2013 with some guarded optimism,” stated IATA chief executive Tony Tyler, noting a more stable Eurozone and the U.S. avoiding the so-called fiscal cliff.
Fuel prices are expected to continue rising and GDP growth is forecast at just 2.3 per cent, but improved business confidence should help cargo markets to recover lost ground from 2012.
“2013 will not be a banner year for profitability, but we should see some improvement on 2012,” he added.
IATA expects global airline profits will increase to US$8.4 billion this year, from an estimated US$6.7 billion in 2012. However, net profit margins are low at around one per cent.
Canadian carriers Air Canada and WestJet Airlines are expected to enjoy improved profits, say industry analysts.
Chris Murray of PI Financial says Air Canada’s pre-tax operating income (EBITDAR) should surge 48 per cent to $240 million in the fourth quarter. He expects the Montreal-based airline will earn $22 million in fiscal 2012, rising to $172 million in 2013 and $198 million in 2014.
“We expect fiscal 2013 should continue to see ongoing improvements in earnings with strong traffic demand and stable fuel prices,” he wrote in a report.
Calgary-based WestJet is expected to see its earnings increase to 43 cents per share in the fourth quarter and $1.75 per share for the year, up from 26 cents and $1.06 per share respectively, said Jacques Kavafian of Toll Cross Securities.
“The big story at WestJet will be 2013 and 2014 with the introduction of premium economy and fare bundling, both initiatives, we expect to make significant earnings contribution,” he wrote.
The Canadian Press
Feb 1, 2013