Higher profits forecast for airlines in UAE, rest of Middle East: More jobs on the way?
Carriers in the region forecast to report more profits in 2019
Highlights
- After hitting a slump, carriers in the region are likely to fare better in 2019, with overall profits estimated to grow by $200 million (Dh734 million)
- Aviation authority IATA says that carriers across the region will achieve $800 million in profts next year
- Emirates, which had earlier reported a profit decline of more than 80 per cent, is confident that strong passenger demand will help the company weather the challenges
Dubai: Airlines in the UAE and the rest of the Middle East will fare better next year and rake in millions of dollars worth of profits, after going through a slump on the back of rising cost pressures.
The region’s carriers will achieve $800 million in net profits in 2019, up from a weaker $600 million in 2018, according to the latest data from the International Air Transport Association (IATA).
The expected net profit per passenger will be $3.33 (1.2 per cent net margin). The aviation body had also shared a similar forecast for the rest of the airlines around the world. Overall, airlines are expected to carry more passengers, hire additional staff and offer higher wages.
Carriers in the region had earlier encountered a setback after more than a decade of double-digit growth. The number of flyers booking flights had slowed down, with passenger capacity growth cut by half to 6.7 per cent in 2017.
One of the leading carriers in the region, Emirates reported in November an 86 per cent drop in its net profit for the first six months of the year due to currency fluctuations and higher oil prices.
The airline shed a little over 1,000 employees in the past six months. Its overall staff count decreased from 103,363 to 101,983, down by 1 per cent compared to March 31, 2018. However, it carried more passengers during the same period, accounting for 30.1 million flyers, up by three per cent.
Shaikh Ahmed Bin Saeed Al Maktoum, chairman and chief executives of Emirates Airline and Group, had said that the next six months will be tough, but the challenges will be offset by strong passenger demand.
“Our home and hub in Dubai continues to attract travel demand, as the airline saw nine per cent more customers enjoying Dubai as a destination… We expect this demand to remain healthy as new attractions come online and the city gears up for Dubai Expo 2020.”
IATA said that the airline industry in the region has “been challenged by the earlier impact of low oil revenues, conflict, competition from other ‘super-connectors’ and setbacks to particular business models, leading to a sharp slowdown in capacity growth.”
The aviation body, however, reported last week that, overall, airlines around the world will perform better in 2019, with net profits forecast to rise to $35.5 billion, slightly ahead of the $32.3 billion expected net profit this year.
Airlines across the globe are expected to expand their payrolls: employment numbers will reach 2.9 million in 2019, up by 2.2 per cent in 2018.
Aside from creating more jobs, workers’ salaries are also likely to rise, while passenger numbers will increase by six per cent.
“The 2019 industry outlook is based on an anticipated average oil price of $65/barrel (Brent) which is lower than the $73/barrel (Brent) experienced in 2018, following the increase in US oil output and rising oil inventories,” IATA said.
“This is welcome relief for airlines which have seen jet fuel prices fall, albeit at a slower pace owing to the impact of low-sulfur environmental measures undertaken by the marine sector that have increased demand for diesel (which competes with jet fuel for refinery capacity).”