Canadian airline profits will falter in 2011 after last year’s strong performance due to higher fuel and labour costs, the Conference Board of Canada reports.
Pre-tax profits are expected to fall by about one-third to $785 million, down from $1.2 billion last year. Profits will remain in the $700-million to $800-million range annually for the next three years, the report said, but costs are expected to rise by more than nine per cent in 2011.
Conference Board economist Maxim Armstrong said recessionary cost-control measures helped airline revenue to take off when sales improved last year, but the profit levels won’t be sustainable.
Airline sales have been growing as businesses loosen budget constraints and consumer confidence grows.