Today's Research on US Airways and United Continental: IATA Expects Airlines to Post Net Profit of $8.4 Billion in 2013

Feb 19, 2013, 08:00 ET from

LONDON, February 19, 2013 /PRNewswire/ --

Back in December 2012, the International Air Transport Association (IATA) provided its 2013 financial forecast for the airline industry. While IATA's outlook for 2013 is cautious, improvement in the global economy should benefit airlines such US Airways Group Inc. (NYSE: LCC), which recently announced a merger with AMR Corp., and United Continental Holdings Inc. (NYSE: UAL), this year. StockCall professionals have completed their technical analysis on US Airways and United Continental and these free reports are accessible by registering at  

IATA's Cautious Outlook

In December 2012, IATA's Director General and CEO, Tony Tyler said that airlines' net profits are expected to rise to $8.4 billion, which would leave the industry with a 1.3% net profit margin. Tyler noted that it is good that the airline industry is moving in the right direction, but the year ahead is shaping up to be another tough one for the industry.

IATA expects global economy to grow 2.3% in 2013. Growth once again will be driven by emerging economies. Passenger demand in 2013 is expected to rise 4.5%, while cargo demand is forecasted to rise 1.4%. IATA expects oil prices to remain slightly moderate at $104 per barrel this year; however, IATA believes that the premium paid for jet fuel refining will result in a smaller decline in jet fuel prices to $124.3 per barrel.

Improving Global Economic Outlook Should Benefit Airlines

While IATA's outlook for the airline industry is cautious, signs of improvement in the global at the start of this year augur well for airlines. In its report, IATA cited the Eurozone debt crisis as a major concern. However, since the start of this year, the Eurozone has shown signs of stabilizing. There are still no signs of growth, though, with fourth quarter GDP in the monetary union falling 0.6%, according to a report released last week.


One of the major trends in the airline industry, especially in the U.S., has been consolidation. Two years ago, United Airlines and Continental Airlines merged, forming United Continental Holdings Inc. Recently, US Airways Group Inc. and AMR Corp., the parent company of American Airlines, announced a much-anticipated merger. Be sure to read our latest technical research on United Continental Holdings Inc. by registering at  

AMR Corp. had filed for bankruptcy in November 2011 and since then there had been talks of a merger between the bankrupt airline and US Airways Group Inc. The merger agreement was finally sealed last week. The combined companies will operate under the American Airlines name. Sign up for the free technical research on US Airways Group Inc. at  

As per the terms of the merger agreement, shareholders of US Airways Group Inc. will receive one share of common stock of the combined airline for each share of US Airways Group Inc. common stock they hold.

Doug Parker, Chairman and CEO of US Airways Group Inc., said that the combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace.

United Continental Holdings Reports January Operational Performance

Earlier this month, United Continental Holdings reported its January 2013 operational results. The airline's consolidated traffic in January rose 0.9%, while consolidated capacity fell 1.9%. Consolidated passenger revenue per available seat mile (PRASM) rose an estimated 3% to 4%.

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