ATA Forecasts Profitable 2008 for U.S. Airlines

The Air Transport Association is forecasting U.S. airlines will again post a cumulative profit of $3.5 billion to $4.5 billion in 2008, which, as ATA vice president and chief economist John Heimlich put it, would give the industry its first profitability “three-peat” since its positive run from 1998 to 2000.

The forecast, released last week, included both passenger and cargo carriers. The airlines have not yet reported their fourth quarter results for 2007, several of which may show losses, but it’s a safe bet the industry will still post a profit for the full year.

Mr. Heimlich made his 2008 prediction in spite of crude oil prices close to $100 a barrel and uncertainty about the U.S. economy.

Mr. Heimich said he is forecasting an average crude oil price of $80 a barrel for 2008. He also is counting on ongoing revenue growth, particularly on international routes, to help offset a sizeable increase in fuel expenses, and no big economic dip this year that would significantly dampen demand.

Mr. Heimlich also noted that airlines have moved aggressively to redeploy their aircraft –primarily for a shift to more profitable international routes, but also to some extent domestically- as well as to trim unprofitable flying and adjust aircraft utilization.