IATA: Global airlines to be more profitable in 2015 | Business| Economy and finance news from a German perspective | DW | 08.06.2015
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IATA: Global airlines to be more profitable in 2015

In a sign of good times for the global civil aviation industry, airlines are projected by the International Aviation Transport Association (IATA) to earn increased profits this year, helped by lower oil prices.

Global airlines revised upwards their outlook for 2015 industry profits by more than 17 percent to $29.3 billion (26.1 billion euros) on Monday, almost doubling earnings logged last year.

Announcing the upgrade during a gathering of 260 member airlines in Miami, IATA said lower oil prices were the main factor pushing the industry further into the black. But the windfall could be muted by the rise in the value of the dollar and widespread airline fuel hedging.

Although all regions are expected to see an improvement in profitability in 2015 compared with 2014, there are stark differences in regional economies, which are also reflected in airline performance, the industry body cautions.

"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 71st annual meeting.

Generating value

IATA had previously forecast a 2015 profit amounting to $25 billion. It said the industry's average net profit margin would almost double to 4 percent from last year's 2.2 percent.

Furthermore, the industry grouping 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.

"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.

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.

More safer

IATA's chief Tyler also said at the meeting that air travel was safer than ever despite a series of headline-grabbing airline disasters in recent months. "With one jet hull loss for every 4.4 million flights last year, flying has never been safer," he underlined.

Letters reading MH3?0

Malaysia Airlines Flight MH370 vanished without a trace in March 2014

"In contrast, paradoxically so, aviation safety has been a constant in recent headlines," added Tyler, describing the disappearance of Malaysia Airlines Flight MH370 in March 2014, the shooting down of Malaysia Airlines Flight MH17 over war-torn Ukraine in July last year and the deliberate crash by a co-pilot of a Germanwings flight into the French Alps in March as "extraordinary events."

"Every loss is a tragedy," he stressed, adding "the greatest tribute we can pay to them is to make flying ever safer. That is precisely what we are doing."

Tyler said improved tracking standards are being developed to report on an airline's whereabout every 15 minutes. "In the near future, emerging technology and proposed new practices will move us closer to ensuring that never again will an aircraft simply disappear."

sri/hg (Reuters, AFP)

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