Airline industry targets $ 6.7 bn profit in 2012

Updated 13 December 2012
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Airline industry targets $ 6.7 bn profit in 2012

GENEVA: Global airlines raised industry profit forecasts on the back of cost cuts and consolidation, but warned of a cocktail of risks including the euro zone crisis and US fiscal concerns.
The International Air Transport Association, which represents 240 airlines, said the industry would make a collective profit of $ 6.7 billion in 2012, up from a previous forecast of $ 4.1 billion.
In 2013, profits are expected to improve to $ 8.4 billion, up from a previous forecast of $ 7.5 billion, IATA said.
The improved outlook is driven mainly by belt-tightening and consolidation in North America in the face of what the airlines body described as a slowing world economy.
Carriers there are expected to make a total of $ 2.4 billion in 2012, up sharply from $ 1.7 billion last year, as airlines fly their planes with fewer empty seats and for more hours a day.
In Europe, airlines are no longer expected to post a combined loss this year but will merely break even, IATA said.
Asia continues to post sharp growth with profits of $ 3 billion expected this year despite concerns over a slowdown of growth in China and exposure to a weak cargo market.
Cargo markets, a barometer of world trade, are stagnant but may pick up in 2013 amid some signs of improved US demand for consumer goods that tend to go by air, IATA officials said.
Airline activity is traditionally seen as a bellwether for the wider economy, with business confidence translating rapidly into demand for premium seats and just under half of global trade by value travel ling by air.
“The US economy is growing but the threat of the fiscal cliff has not been eliminated,” said IATA Chief Economist Brian Pearce, referring to the potential impact of steep tax hikes and federal spending cuts budget cuts scheduled to take effect on Jan. 1.
Pearce said world economy as measured by global industrial production was slowing down. International air travel closely tracks industrial production, a broad-based measure of economic activity and one of the most timely, Pearce said.
Europe’s economic crisis is “far from solved,” he said, something that could increase pressure on airlines there to consolidate.

“There are opportunities for further consolidation in Europe,” said IATA Director General Tony Tyler, noting the presence of three clusters led by Air France-KLM, Lufthansa and British Airways-Iberia.
“Europe has a lot of airlines. One would expect those three groups would have a gravitational attraction to smaller carriers who find economic conditions too difficult to operate independently,” Tyler told reporters.
However a shortage of finance caused by the region’s economic crisis could slow the process down, he added.
Airlines claim the growing power of online reservation systems is also harming their ability to eke out extra profits.
One of their chief worries is that online travel agencies do not always make room for products designed to improve the average revenue per passenger, such as premium economy seating. Programming such web features costs money and takes time.
IATA, which sets standards and lobbies on behalf of airlines, announced it would develop ways to help passengers find the type of seats they were looking for and try to persuade online systems to use them. Such systems could also warn hotels and rental firms of delays or changes of plans, it said.


Saudi Arabia has lion’s share of regional philanthropy

Updated 14 min 22 sec ago
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Saudi Arabia has lion’s share of regional philanthropy

  • Kingdom is home to three quarters of region's foundations
  • Combined asets of global foundations is $1.5 trillion

Nearly three quarters of philanthropic foundations in the Middle East are concentrated in Saudi Arabia, according to a new report.

The study, conducted by researchers at Harvard Kennedy School’s Hauser Institute with funding from Swiss bank UBS, also found that resources were highly concentrated in certain areas with education the most popular area for investment globally.

That trend was best illustrated in the Kingdom, where education ranked first among the target areas of local foundations.

While the combined assets of the world’s foundations are estimated at close to $1.5 trillion, half have no paid staff and small budgets of under $1 million. In fact, 90 percent of identified foundations have assets of less than $10 million, according to the Global Philanthropy Report. 

Developed over three years with inputs from twenty research teams across nineteen countries and Hong Kong, the report highlights the magnitude of global philanthropic investment.

A rapidly growing number of philanthropists are establishing foundations and institutions to focus, practice, and amplify these investments, said the report.

In recent years, philanthropy has witnessed a major shift. Wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments.

Organizations such as the Bill and Melinda Gates Foundation have become increasingly high profile — but at the same time, some governments, including India and China, have sought to limit the spread of cross-border philanthropy in certain sectors.

As the world is falling well short of raising the $ 5-7 trillion of annual investment needed to achieve the UN’s Sustainable Development Goals, UBS sees the report findings as a call for philanthropists to work together to scale their impact.

Understanding this need for collaboration, UBS has established a global community where philanthropists can work together to drive sustainable impact.

Established in 2015 and with over 400 members, the Global Philanthropists Community hosted by UBS is the world’s largest private network exclusively for philanthropists and social investors, facilitating collaboration and sharing of best practices.

Josef Stadler, head of ultra high net worth wealth, UBS Global Management, said: “This report takes a much-needed step toward understanding global philanthropy so that, collectively, we might shape a more strategic and collaborative future, with philanthropists leading the way toward solving the great challenges of our time.”

This week Saudi Arabia said it would provide an additional $100 million of humanitarian aid in Syria, through the King Salman Humanitarian Aid and Relief Center.

The UAE also this week said it had contributed $192 million to a housing project in Afghanistan through the Abu Dhabi Fund for Development.