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Asian airlines post 47 percent fall in 2011 profit

KUALA LUMPUR, Malaysia — Airlines in the Asia Pacific region posted a lower combined net profit of $4.8 billion in 2011, down 47 percent from a year ago due to higher oil prices and a weak cargo market, an industry group said Wednesday.

The Kuala Lumpur-based Association of Asia Pacific Airlines said total revenue for its 17 members rose 10 percent from a year ago to hit $162 million. But it said in a statement this represented only a 3 percent profit margin and a poor return on invested capital.

The association said cargo revenues fell 1.4 percent to $22 billion last year. It said operating expenses rose at a faster rate of 15 percent to $155 billion, largely due to a 28 percent surge in fuel costs to $52 billion.

“Asia Pacific carriers continued to outperform the overall industry in 2011, with continued growth in passenger numbers, but profit margins were squeezed by high oil prices, as well as the impact of a weak air cargo market,” said association director general Andrew Herdman,

Herdman warned persistently high oil prices and slower economic growth in the major developed markets would continue to cloud prospects.

“So far this year, Asian airlines have continued to benefit from stronger economic growth within the region, seeing further growth in international passenger numbers, but air cargo markets remain weak,” he said, adding that airlines are responding with strict cost controls and route cuts to match demand.