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Back in the black

In its newly released outlook on Canada’s air transportation industry, the Conference Board of Canada says that this country’s airlines “can expect a second consecutive year of losses in 2012.” Michael Burt, director, industrial economic trends for the Conference Board, says: “The Canadian air transportation industry is set for a bumpy flight over the coming months. The European debt crisis is not over and the U.S. economic recovery remains sluggish. At home, Canadians are turning their attention to paying down their debt and are growing more cautious when it comes to spending.” Burt continued that: “Given this weaker confidence and the deceleration in world economic growth, Canadian consumers and businesses are likely to be more cautious about their travel spending in the coming months.” The Conference Board’s “Canadian Industrial Outlook: Canada’s Air Transportation Industry — Summer 2012 also notes that with fuel prices increasing more than 30% in 2011, the industry lost $900 million last year. And while oil prices have cooled off in the first half of this year — so costs will rise at a slower pace than revenues — the Conference Board’s outlook indicates that the industry is forecast to lose another $165 million in 2012 The Conference Board also points out that when the industry does return to the black — a profit of $231 million is expected in 2013 — its profit margin will be only 1.2%, well below the margins of recent years. The challenging economic environment, combined with fiercer competition in the industry, is putting pressure on airlines’ profit margins. Go to http://www.conferenceboard.ca for more.

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