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Airline Profits Better Than Estimated Says IATA Report

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The airline industry is expected to make more money in 2011 than previously estimated, announced the Air Transport Association (IATA) on Tuesday. The organization issued a press release stating that their initial estimate of the industries’ profit expectations for 2011 was too low. As a result, the IATA’s initial estimate made in June of $4 billion has now been upped to $6.9 billion.

After multiple economic downturns in the past few years, Tuesday’s announcement is a bit of good news for the beleaguered industry. Though the gains are modest–$6.9 billion in profit is miniscule considering the industry’s total revenue is at $594 billion–the news comes at the heels of two major deals made over the summer.

Both Boeing and Airbus, longtime aerial rivals, have been contracted to revamp the aging fleets of two major American carriers. In July, Delta Air Lines purchased 100 Boeing 737 jets worth an estimated $8.5 billion, and in August, American Airlines contracted Airbus and Boeing to split a 460-plane order. Airbus will be responsible for 260 jets while Boeing will construct the remaining 200. Some speculate that the larger order given to Airbus was a result of labor issues within Boeing’s ranks.

Earlier this month, both companies released their future projections that suggest an increase in air travel over the next 20 years. Boeing estimates the need for 33,500 new planes over the next 20 years, which is valued at around $4 trillion. And while Airbus sees growth in the future, their estimate is a more modest 28,000 planes over the next two decades. Both companies attribute the need for so many new planes to a projected rise in middle class passengers, the economic rise of select cities around the world, and the emergence of fuel-efficient aircraft.

By Steve Breazeale for PeterGreenberg.com

Related Links: The Economist, IATA.org, CBS News, FirstPost.com

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