Airline industry expects larger profit
TEXT OF INTERVIEW
BILL RADKE: For the second time this year, the airline industry’s trade association, the IATA, has changed its profit forecast for the better. Marketplace’s Alisa Roth joins us live from our New York bureau. Good morning, Alisa.
ALISA ROTH: Good morning.
RADKE: Why is the industry more optimistic?
ROTH: Well, a couple of things have been happening. Air traffic, generally, is picking up a little bit. Airlines in the Asia-Pacific region, in particular, have been seeing a big increase in cargo shipments. But most importantly, capacity is tighter. Airlines have been taking planes out of service, so fleets are smaller. If you’ve flown recently, you’ve probably noticed that there are more people on the flights. That’s more efficient, but it also lets airlines charge more for the ticket. So the association is now saying it expects a net profit of almost $9 billion this year. That’s almost three times what it was predicting back in June.
RADKE: OK. So that’s it? The airline industry has officially recovered?
ROTH: Unfortunately for the industry, not quite. As the association’s CEO put it, it’s time for a nice little party, it’s not time for that big blowout celebration just yet. This report is predicting that European airlines are going to stay in the red this year, although they’ll probably lose less money than they have been losing. The economy there is in worse shape than it is elsewhere. And airlines there have just had a harder time cutting that capacity. The other thing is, a bunch of new airplanes are scheduled to be delivered this year. That’s going to increase capacity of the airlines, and that will actually probably make for lower profits next year.
RADKE: Maybe a little extra room in the overhead bin.
ROTH: One can only hope.
RADKE: We can hope. Marketplace’s Alisa Roth, thank you very much.
ROTH: You’re welcome.
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