Debt Crisis In EU, Rising Jet Fuel Prices Will Hurt
The influential Frost & Sullivan consulting firm finds some
contradictions among recent market forecasts issued by Airbus,
Boeing, and IATA, the International Air Transport Association.
Diogenis Papiomytis, Frost & Sullivan Principal Consultant,
says most western airlines are in need of modernization, even
though their respective markets will see little growth over the
next few years. He contrasts that to Air Asia's Paris Air Show
order for 200 A320s, indicative of an airline clearly geared for
The recent manufacturer forecasts for the next 20 years saw
Boeing predict 31,500 new aircraft deliveries, but Airbus only
28,000, a difference of more than 10 percent. Papiomytis observes
that Airbus is, however, bullish on the future for the "very large"
segment over 400 seats, which just happens to include its A380
The analyst suggests the biggest takeaway from the Airbus
forecast is what he calls "constrained optimism" regarding world
economic growth. Papiomytis observes, "Airbus expects a 3-4 per
cent world GDP growth in 2012, with a corresponding air
traffic growth of 7 per cent. Once again, so called 'mature
economies' are the ones which keep the global airline industry from
double digit growth."
IATA does not attempt to forecast airliner deliveries, but
rather worldwide airline profits, and its predictions beyond 90
days out have looked wildly unreliable in the past two years. The
latest forecast, issued this week, revises full-year global airline
net profit estimates from $4.0 to $6.9 billion, based on better
results from European carriers.
Papiomytis calls IATA numbers "good indicators of market
sentiment, but rather irrelevant from a macro-perspective." He
predicts airlines will struggle to break-even next year, facing
increasing jet fuel prices and fears of a contagious European
economic crisis. In summary, he says, "everything is pointing
towards a difficult 2012 for airlines."