Cargo, passenger business to drive airlines’ profitability
KUALA LUMPUR: Strongerthandemand for cargo and passenger business will boost the profitability of the airline industry this year, said the International Air Transport Association (IATA).
IATA also revised its forecast for the industry’s profit to US$31.4 billion from US$29.8 billion on the back of a revenue of US$743 billion compared with US$736 billion previously, IATA said in a statement.
Director- general and chief executive officer Alexandre de Juniac said it would be another solid year of performance for the airline industry as demand for both the cargo and passenger business was stronger than expected.
“While revenues is increasing, earnings are being squeezed by rising fuel, labour and maintenance expenses.
“Airlines are still well in the black and delivering earnings above their cost of capital. But, compared with last year, there is a dip in profitability,” he said.
In 2017, airlines are expected to retain a net profit of US$7.69 per passenger versus US$9.13 in 2016 and US$10.08 in 2015.
The average net profit margin stands at 4.2 per cent against 4.9 per cent in 2016.
“Airlines are defining a new epoch in industry profitability. For a third year in a row, we expect
Airlines are still well in the black and delivering earnings above their cost of capital. But, compared with last year, there is a dip in profitability. Alexandre de Juniac, director-general and chief executive officer
returns that are above the cost of capital. Airlines must remain vigilant against any cost increases, including from taxes, labour and infrastructure,” said de Juniac.
While overall industry performance remained strong, major regional variations remained.
About half the industry’s profits were generated in North America (US$15.4 billion), carriers in Europe and Asia-Pacific would each add a US$7.4 billion profit to the industry total.
Latin America and Middle East carriers were expected to earn US$800 million and US$400 million, respectively, while Airlines in Africa were expected to post a US$100 million loss. — Bernama