The International Air Transport Association (IATA) has announced that it expects the global airline industry to make a net profit of 29.8 billion dollars in 2017.
IATA gave the forecast in a statement by its Director-General, Alexandre de Juniac on Thursday in Lagos.
The statement said the forecast total revenues of 736 billion dollars represented a 4.1 per cent profit margin.
According to the statement, this will be the third consecutive year (and the third year in the industry’s history) in which airlines will make a return on invested capital (7.9 per cent) which is above the weighted average cost of capital (6.9 per cent).
It said IATA revised slightly downward its outlook for 2016 airline industry profitability to 35.6 billion dollars from the June projection of 39.4 billion dollars owing to slower global Gross Domestic Product (GDP) growth and rising costs.
The statement said this would still be the highest absolute profit generated by the airline industry and the highest net profit margin (5.1 per cent).
“Airlines continue to deliver strong results. This year we expect a record net profit of 35.6 billion dollars.
“Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning 29.8 billion dollars.
“That’s a very soft landing and safely in profitable territory. These three years are the best performance in the industry’s history irrespective of the many uncertainties we face.
“Indeed, risks are abundant — political, economic and security among them.
“And controlling costs is still a constant battle in our hyper-competitive industry, it said.
“We need to put this into perspective. Record profits for airlines means earning more than our cost of capital.
“For most other businesses that will be considered a normal level of return to investors.’’
According to the statement, three years of sustainable profits is a first for the airline industry and after many years of hard work in restructuring and re-engineering the business the industry is also more resilient.
It also projected nearly four billion travellers and 55.7 million tonnes of cargo in the coming year.
“Almost one per cent of global GDP is spent on air transport — some 769 billion dollars.
“Air transport has made the world more accessible than ever and it is a critical enabler of the global economy,’’ it added.
