Improved industry outlook for aviation sector

The International Air Transport Association (Iata) has announced an upward revision of its 2015 industry outlook to a $29.3 billion net profit.

On expected revenues of $727 billion, the industry will achieve a 4.0% net profit margin, according to a statement released this week. The significant strengthening from the $16.4 billion net profit in 2014 (re-stated from $19.9 billion) reflects the net impact of several global factors, including stronger global economic prospects, record load factors, lower fuel prices, and a major appreciation of the US dollar,

All regions are expected to see an improvement in profitability in 2015 compared with 2014.There are, however, stark differences in regional economies, which are also reflected in airline performance. “The industry’s fortunes are far from uniform. Many airlines still face huge challenges,” said Tony Tyler, Iata’s director general and CEO.

Over half the global profit is expected to be generated by airlines based in North America ($15.7 billion).

“For the airline business, 2015 is turning out to be a positive year. Since the tragic events of September 2001, the global airline industry has transformed itself with major gains in efficiency. This is clearly evident in the expected record high passenger load factor of 80.2% for this year. The result is a hard-earned 4% average net profit margin. On average, airlines will retain $8.27 for every passenger carried,” said Tyler.

But providing some perspective, he pointed out that Apple, a single company, had earned $13.6 billion in in the second quarter of this year. “That’s just under half the expected full-year profit of the entire airline industry. We don’t begrudge anyone their business success. But it is important for our stakeholders, particularly governments, to understand that the business of providing global connectivity is still a very tough one,” said Tyler.

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