Iata predicts higher profits for airline industry in 2016

The airline industry is expected to post a profit of US$36.3 billion next year on the back of lower oil prices and stronger travel demand, the International Air Transport Association (Iata) said in its outlook.

The airlines’ association said that the net profit forecast for next year reflects a 5.1 per cent profit margin for the industry. It also revised its net profit outlook for this year to $33bn, up from the $29.3bn predicted in June.

“Lower oil prices – forecast to be $55 per barrel Brent in 2015 and averaging a lower $51 per barrel in 2016 – are giving airline profits a boost,” said Iata.

Next year, the trade body anticipates passenger numbers to rise 6.9 per cent next year to 3.8 billion, up from 6.7 per cent this year.

Cargo, however, is expected strengthen to 3 per cent next year from 1.9 per cent this year, according to Iata.

Iata added that a recovery in the Eurozone economy s offsetting the slower growth in China and the downturn in Brazil, as global GDP is seen to grow to 2.7 per cent next year, up from 2.5 per cent this year.

For Middle East carriers, their collective profits are seen at $1.4bn this year, lower than previously anticipated profit of $1.8bn.

Going into next year, the region’s airlines are expected to “recover most of the lost ground” with a $1.7bn net profit.

“The Middle East is, however, split between strong Gulf airlines, with successful long-haul super-connector operations, and regionally focused airlines, which are suffering from the effect of lower oil revenues and political conflict,” said Iata.

Profit per passenger in the Middle East is forecasted at $7.97 for next year, which is “slightly less” than that the expectation for European airlines and almost a third of what North American airlines are achieving, said Iata.

However, an increase in traffic at the region’s modern hubs is driving double-digit growth with capacity expanding by 12.1 per cent and 12.2 per cent, respectively, this year and next, Iata said.


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