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Air cargo/global logistics: IATA issues promising forecast

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By Patrick Burnson, Executive Editor
June 07, 2010

Global air cargo traffic is back to pre-recession levels, declared Giovanni Bisignani,?director general and CEO?International Air Transport Association (IATA). Speaking at its 66th Annual General Meeting and World Air Transport Summit?in Berlin, Germany, he provided a “snapshot” suggesting cautious optimism.

“Our resilience has been tested by disease, war, terrorism, spiking oil prices and even a volcano,” he said. “The worst economic recession in 80 years saw revenues drop by $81 billion and losses of almost $10 billion in 2009.”

“But today we are upgrading our global industry forecast to a full-year profit of $2.5 billion,” said Bisignani. “This is the first global profit since 2007.  It is a reason to celebrate. But with a margin of 0.5 percent, it will be a modest party. And we face real downside risks.”

Chief among them, he said, is capacity?excess. Bisignani warned that the upturn “will bring temptation.” 1,340 aircraft will be delivered this year and only 500 are for replacement. The discipline of chasing profits, not market share, is the only way to protect the bottom line, he emphasized.

The next concern is organized labors, which he characterized as being “out of touch with reality.” Bisignani said airlines cannot pay salary increases at a time when they are trying to recover collectively from $47 billion in losses.

Taxation is another worry for the air cargo sector. Governments went $2.7 trillion in debt to rescue the bankers, stimulate economies and support currencies, he said.

“And the risk of oil price volatility may not be over, either. Hedging is critical for our business, but speculators are making huge profits. Governments must protect the economy from irresponsible profiteering.”

Click here for a full transcript of the State of the Air Transport Industry speech

 

About the Author

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Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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