Miami: Airlines will generate $29.3 billion of profit this year, the International Air Transport Association (IATA) said on Monday, an upwards revision of 17 per cent on its last outlook for 2015.
IATA increased its profit projection by $5 billion in its first revision of its forecast for 2015 on the back of greater operational efficiency and lower oil prices.
The group, which represents 250 airlines, said in December it expected airlines to make $25 billion in 2915. Last year, the industry made $16.4 billion.
The global airline industry is expected to garner sales of $727 billion this year with a net profit margin 4 per cent.
Tony Tyler, the chief executive of IATA, said at the groups Annual General Meeting in Miami airlines are becoming more efficient with their costs. Airlines combined fuel bill is forecast to drop 15.4 per cent to $191 billion this year, compared to 2014. But Tyler said that while the lower oil price "is having a positive impact," the strengthening US dollar was moderating its benefit.
Efficiency is the key driver, he told reporters.
On average, airlines will make $8.27 for each passenger. Middle Eastern airlines are expected to post a collective $1.8 billion net with an average margin of 3.1 percent.
Challenges
Tyler warned of challenges in the Middle East, particularly rising infrastructure costs, increasingly crowded skies and an increase in the number of military conflicts in the region.
North American carriers are forecast to make over half of the $29.3 billion profits, pulling in an average of $18.12 per passenger.
Doug Parker, American Airlines chief executive and chairman, said the rise in profits would be shared with employees. A number of US airline industry employees were picketing out the front of the IATA meeting claiming that they are paid less today than several years ago.
Airlines are expected to fill 80.2 per cents of all seats, which will be a record if achieved. At an industry level, the expected return on investment capital is 7.5 per cent.
For the first time, the return on investment capital will be in excess of the industry's cost of capital, which has fallen to 6.8 per cent, largely due lower bond yields.
This reporter travelled to Miami courtesy of IATA.
