IATA hikes 2016 profit forecast for global airlines

NEW DELHI: The International Air Transport Association ( IATA) has revised its 2016 financial outlook for global air transport industry profits upwards to $39.4 billion (from $36.3 billion forecast in December 2015) on the back of low fuel prices and increase in air travellers.

That is expected to be generated on revenues of $709 billion for an aggregate net profit margin of 5.6%.

"2016 is expected to be the fifth consecutive year of improving aggregate industry profits," the IATA said in a release.

In 2015 airlines generated a global aggregate profit of $35.3 billion (re-stated from $33.0 billion estimated in December 2015). All regions are making a contribution to the $4.1 billion boost over 2015 profits with improved results; but there are stark regional differences in performance.

"Over half of the industry profits will be generated in North America ($22.9 billion) while African carriers are forecast to continue generating an overall loss (-$0.5 billion)," the outlook added.

"Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices. Performance, however, is being bolstered by the hard work of airlines. Load factors are at record levels.

New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition. The result: consumers are getting a great deal and investors are finally beginning to see the rewards they deserve," said Tony Tyler, IATA’s Director General and CEO in a release.