Airlines cut profit forecast by $1bn
Global airlines cut their 2013 industry profit forecast by 8% to $11.7 billion on Monday, citing weaker growth in parts of Asia and a worsening slowdown in freight demand.
The International Air Transport Association, which represents some 200 carriers, said the $1 billion downgrade from its previous forecast for the whole industry in June also reflected a spike in oil prices driven by the Syrian crisis.
‘‘The industry situation is not improving as quickly as we had expected,’’ IATA director general Tony Tyler said.
‘‘I should stress that this is still an improvement over the 2012 profit of $7.4 billion.’’
For 2014, IATA predicted a rebound in profits to $16.4 billion on hopes of rising business and consumer confidence and a respite in oil prices.
However, its chief economist warned any prolonged spike in fuel costs could upset this scenario.
‘‘Emerging market growth in India, Brazil and to a certain extent China has been slower than anticipated,’’ Tyler told reporters on a conference call.
‘‘This has been somewhat balanced by improvements in the US economy as well as a stabilisation in the euro zone.’’
IATA raised its forecasts slightly for North American and European airlines as US carriers consolidate and cut capacity, and Europe’s financial crisis shows signs of easing.
But Tyler said he was concerned about a US government attempt to block a proposed merger between US Airways and American Airlines, saying it contradicted a general shift away from regulation in air transport.
For Asia, which is set to become the leading power in aviation in coming years, IATA chopped a third off its profit forecast to $3.1 billion.
Although China’s domestic market continues to grow and Japan’s monetary expansion is boosting that country’s carriers, China’s international routes and Indian markets face pressure.
Asia is particularly exposed to stagnant growth in cargo markets that reflect weak international trade and an oversupply of plane belly capacity caused by growth in the passenger fleet.
IATA sees growth of just 0.9% in air cargo traffic, which handles a third of the world’s trade by value, compared with a previous forecast of 1.5% and well below global passenger growth of 5% predicted for this year. DETROIT: Chrysler Group LLC was forced to file paperwork for an IPO by its second-biggest shareholder on Monday, escalating a spat with main owner Fiat SpA which said it could scale back its commitment to the US automaker.
Fiat, which owns 58.5% of Chrysler, wants to take full control and buy out the rest of the stock owned by the United Auto Workers trust fund, but has baulked at the more $5 billion being demanded.
In response, the UAW trust exercised a right enshrined in Chrysler’s 2009 government-financed bankruptcy to go forward with an initial public offering, stepping up pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal.
Bankers and analysts view the filing