AIR­LINES LIKELY TO BE PROF­ITABLE IN 2017: IATA

SP's Airbuz - - News Briefs -

As per as­sess­ment made by the In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA), com­mer­cial air­lines are pro­jected to col­lec­tively gen­er­ate a record net profit of $35.6 bil­lion in 2017. Fore­cast made ear­lier in June 2016 of a profit of $39.4 bil­lion has been re­vised down­ward at­tribut­ing the re­duc­tion to slower growth in global gross do­mes­tic prod­uct and ris­ing op­er­a­tional costs.

How­ever, even if the $35.6 bil­lion profit is achieved, it would be the high­est ab­so­lute profit ever gen­er­ated by the global air­line in­dus­try. Ac­cord­ing to IATA, higher oil prices will have the big­gest im­pact in 2017. In 2016 oil prices av­er­aged $44.60 per bar­rel and this is fore­cast to in­crease to $55 per bar­rel in 2017. This will push av­er­age jet fuel prices from $52.10 in 2016 to $64.90 per bar­rel next year. Fuel is ex­pected to ac­count for 18.7 per cent of the in­dus­try’s cost struc­ture in 2017, which is sig­nif­i­cantly be­low the re­cent peak of 33.2 per cent in 2012-13.

The strong­est fi­nan­cial per­for­mance is be­ing de­liv­ered by air­lines in North Amer­ica. Net post-tax prof­its will be the high­est at $18.1 bil­lion in 2017 al­though down slightly from the $20.3 bil­lion ex­pected in 2016. Euro­pean air­lines are pro­jected to gen­er­ate a net profit of $5.6 bil­lion in 2017, a drop from the $7.5 bil­lion in 2016 and Asia-Pa­cific car­ri­ers are ex­pected to gen­er­ate $6.3 bil­lion next year, a drop from the $7.3 bil­lion fig­ure in 2016. In 2017, IATA is also pro­ject­ing air­lines to take de­liv­ery of 1,700 new air­craft.

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