Airlines forecast to make higher than expected profit this year
Airlines should make a higher than expected collective profit of almost $30 billion this year, up from just $16 billion last year.
Governing body, the International Air Transport Association (IATA), said profits have been boosted by falling oil prices, rising passenger demand and the strengthening of the US dollar.
More than half the profit will be generated by US airlines, whose average net profit per passenger is $18 compared with European airlines’ average of just $6.
"For the airline business, 2015 is turning out to be a positive year," said IATA director general and CEO Tony Tyler.
"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."
However, Tyler pointed out that computer-to-phone company Apple made more than $13 billion in the second quarter of this year alone, 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.
For the first time, the industry-level average return on invested capital, which has reached 7.5%, will be in excess of its cost of capital, which has fallen to 6.8%, largely due to lower bond yields.
This industry average is, however, dominated by US airlines, which have benefitted the most from the fall in US dollar-denominated fuel prices, a strong local economy, and industry restructuring.
The average non-US airline is still struggling with returns below the cost of capital and a ‘significant ‘debt burden, said IATA.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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