Global airline 2015 profit forecast to be $29bn
The International Air Transport Association (IATA) announced on Monday that global airlines' 2015 profit has been upgraded over 17% to an estimated $29 billion. The International Air Transport Association, announcing the upgrade during a gathering of 260 member airlines, said lower oil prices were the main factor pushing the industry further into the black, according to Reuters. But the windfall could be muted by the rise in the value of the dollar and widespread airline fuel hedging. "The industry's profits are far from uniform. Many airlines still face huge challenges," IATA Director General Tony Tyler said in a declaration to the airline lobby's annual meeting.
IATA had previously forecast a $25 billion 2015 profit. It said the industry's average net profit margin would almost double to 4 percent from last year's 2.2 percent. It saw the fuel bill dwindling to $191 billion from $226 billion in 2014, when airlines made a restated profit of $16.4 billion. At the same time, planes are expected to fly fuller than ever before as the industry continues to match capacity more closely to demand, though some airline bosses meeting in Miami are worried such discipline could start to fray.
"A focus on efficiency is seeing supply matched more closely than ever with demand and is expected to produce a record-high load factor of 80.2 percent," IATA said, referring to the proportion of seats sold on an average flight, according to Deutsche Welle. The body also noted that for the first time in the industry's history, airlines this year were poised to deliver returns on capital invested in them that exceeded the average cost of that capital. Even though some airlines generate significant profits when the economy is strong, high costs such as labor and fuel and intense competition have given air transport a chronic reputation for destroying value for investors. This year, the industry, which employs 2.5 million people, is expected to generate $4.9 billion of value for investors, helped by restructuring and low interest rates, IATA says.
