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updated: 12/12/2013 7:55 AM

Airlines forecast profits to jump to record high

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  • The global airline industry forecast Thursday a jump in profits to $19.7 billion next year, helped by falling jet fuel prices, rising travel demand and cost-cutting.

      The global airline industry forecast Thursday a jump in profits to $19.7 billion next year, helped by falling jet fuel prices, rising travel demand and cost-cutting.
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Associated Press

GENEVA -- The global airline industry forecast Thursday a jump in profits to $19.7 billion next year, helped by falling jet fuel prices, rising travel demand and cost-cutting.

The Geneva-based trade association for the world's airlines said the strong outlook -- well above its expected net profit of $12.9 billion this year and $7.4 billion in 2012 -- would be its biggest absolute profit ever.

But the International Air Transport Association, which represents 240 airlines, or 84 percent of total air traffic, noted that the margins would be low. Next year's profit would come from projected revenues of $743 billion, whereas 2010's $19.2 billion was made on revenues of just $579 billion.

Tony Tyler, director-general and CEO of IATA, told reporters that the profit would amount to a little less than $6 per passenger.

"To put that into perspective, the McDonald's down the road here in Geneva will make about the same amount of profit by selling four Happy Meals at a cost in Geneva of $30," said Tyler.

He noted that kind of margin, at 20 percent, is well out of reach for airlines.

"It begs the question of whether $6 per passenger is a reasonable reward for airlines if you consider the technology, skills and capital that is invested," he said.

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