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Airlines predict greater profits for 2010, 2011

December 14, 2010 | 11:37 am

United airlines An international trade group for the global airline industry revised its profit projections Tuesday, up by about 70% for 2010 and 2011.

But despite the improved outlook forecast by the International Air Transport Assn., the group still expressed fears that the industry's recovery from the economic crisis could stall next year because of another economic slump, higher fuel costs and a drop in demand, particularly in Europe.

The association projected net profits for the global airline industry of $15.1 billion in 2010, up from a September forecast of $8.9 billion. It also projected $9.1 billion in net profits for 2011, up from the previous forecast of $5.3 billion.

The driving forces behind the increased profitability for 2010 are increased demand for airline tickets, higher ticket prices and industry costs that have remained relatively stable.

"The third quarter of 2010 was exceptionally positive in terms of passenger traffic volume," Giovanni Bisignani, director general of the association, said in a statement.

But Bisignani sees the recovery slowing in 2011, with demand for airline seats dropping sharply in most regions of the world. He also expects fuel costs to increase about 6% and austerity measures imposed in Europe chilling demand for travel.

"Next year, the industry will face tougher conditions than we are experiencing today," he said.

-- Hugo Martin

Photo: A plane takes off from Los Angeles International Airport. Credit: Los Angeles Times