Asia-Pacific airlines post $9.5-B net profits in 2010 in turnaround

Manila Bulletin
By EDU LOPEZ
May 8, 2011, 11:04pm

MANILA, Philippines — Asia Pacific-based carriers have reported a record US$9.5 billion in net profits in 2010, a major turnaround from US$1.7 billion in net losses suffered in 2009.

The Association of Asia Pacific Airlines (AAPA) said the strong results were underpinned by a resurgence of air travel and air freight demand, and operating efficiencies including record high load factors.

International passenger traffic, measured in revenue passenger kilometres, grew by 9.6% in 2010, whilst international cargo traffic, expressed in freight ton kilometres, surged by 24.0%.

Combined revenues for Asia Pacific carriers reached US$147 billion, 30% higher than the US$113 billion reported in 2009. Passenger revenues rose by 26% to US$106 billion whilst cargo revenues jumped 52% to US$22 billion.

Operating expenses increased by 18% to US$134 billion, mainly due to a 28% increase in fuel expenses to US$43 billion, the single biggest cost item.

The share of fuel expenditure as a percentage of total operating costs rose to 32% in 2010, from 29% the previous year, as oil prices rose 29% to an average of US$80 per barrel in 2010.

Non-fuel expenditures grew by 13% to US$91 billion, with overall staff costs rising 12%.

Andrew Herdman, AAPA Director General said: “Buoyed by a firm recovery in premium business travel and a very strong rebound in demand for air freight, Asia Pacific carriers saw a welcome return to profitability in 2010, after two years of heavy losses.

Asia Pacific airlines led the industry recovery, reporting combined net profits of US$9.5 billion, reflecting a 6.4% net margin, well above the industry average.

At the same time, the region’s carriers are taking on a more active role in international aviation policy debates which will shape the future development of the industry as a key driver of social and economic development.”

Looking ahead, Herdman expects the medium and long term prospects for Asia Pacific aviation remain very positive, but the immediate outlook is somewhat clouded by the sharp increase in oil prices this year, which may dampen the global economic recovery.

The lingering effects of the Japanese earthquake are also still evident, although there are some early signs of a recovery in demand for travel to and from Japan, Herdman added.