Geneva: The Middle East airlines will see collective profits of $1.4 billion in 2015, lower than the previously forecast $1.8 billion.
However, the region is expected to cover most of the lost ground with a $1.7 billion net profit in 2016, according to the International Air Transport Association (IATA).
The aviation watchdog announced today in Geneva the financial outlook for the global airlines industry for the coming year as well as revised its profit outlook for the current year.
“The falling oil prices and strong air travel are going to be the two major factors driving the profitability next year,” said Brian Pearce, Chief Economist at IATA.
Largely calling it good news for the aviation industry, IATA said the airline industry will reap $36.3 billion in total net profits in 2016 – averaging a net profit margin of 5.1 per cent.
The outlook for the industry for this year, meanwhile, was also revised upwards to a net profit of $33 billion (4.6 per cent net profit margin) from $29.3 billion forecast in June.
“These are better numbers than we have reported before. Indeed the industry is surpassing an important benchmark. The cost of the capital is just under 7 per cent. And our expectation for the airlines is to achieve a return on capital of 8.3 per cent this year, increasing to 8.6 per cent in 2016,” said Tony Tyler, Director General and chief executive of IATA.
“So we are finally, after years of destroying capital, delivering the minimal level of profitability that an investor would expect.”
