IATA has scaled back its industry outlook for 2016 by almost $4 billion, though it still sees airlines posting a record net profit of $35.6 billion for the year.
The industry body, in its first forecast for 2017, is also projecting a fall in collective net profitability next year to $29.8 billion. This, though, would still mark an eighth consecutive industry profit – and a third in a row – with airlines' return on invested capital having exceeded the cost of capital.
"This is the best performance in the industry's history – irrespective of the many uncertainties we face," says IATA director general Alexandre de Juniac, who unveiled the latest forecast at its global media day in Geneva today.
IATA had in its June forecast raised its net profit outlook to $39.4 billion. But it has cut these expectations to $35.6 billion as a result of slower GDP growth and rising costs. This marks the first cut in IATA's half-yearly outlook since June 2014.
North American carriers remain by far the most profitable. Even after shaving $2.5 billion from its June forecast for the region, IATA still sees North American carriers making a profit of $20.3 billion in 2016 – well over half the global figure. This, though, will be slightly down on the $21.5 billion the region's carriers posted in 2015.
IATA has also cut its profit expectation for 2016 among African, Asia-Pacific and Middle East carriers. It sees European carrier profits unchanged at $7.5 billion – making it the second most profitable region in 2016 – and has lifted its Latin American expectations slightly. Carriers in that region are foreseen returning to profit in 2016 – meaning only African operators will be in the red for the year.
For 2017, IATA sees higher fuel costs and a reduction in passenger growth as the demand stimulus from lower oil prices tapers off. But it see this partly offset by a a strengthening of global economic growth.
As a result, IATA has set its net profit outlook for 2017 at $29.8 billion – almost $6 billion down on this year. It projects a fall in profits for all regions – aside from Africa which it sees with a loss unchanged at $800 million – with North American carriers continuing to lead the way with net profits of $18.1 billion.
"We face risks and the ups-and-downs of the business cycle," says de Juniac. But he adds: "The airlines are in better shape to remain profitable while facing these challenges. So we see a soft landing safely in profitable territory for 2017."
Source: Cirium Dashboard
