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Global airline industry to hit record profit of US$35.6b in 2016: Iata

Thursday, December 8, 2016 - 18:00

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SLOWING global growth has prompted the International Air Transport Association (Iata) to downgrade its profitability forecast for 2016 for the global airline industry to US$35.6 billion, but even so this will still be its highest level.

SLOWING global growth has prompted the International Air Transport Association (Iata) to downgrade its profitability forecast for 2016 for the global airline industry to US$35.6 billion, but even so this will still be its highest level.

But even as growth is expected to pick up in 2017, rising oil prices will crimp on profits for airlines, said Iata on Thursday.

It said that the US$35.6 billionis lower than its June projection of US$39.4 billion "owing to slower global GDP (gross domestic product) growth and rising costs", but this will still be the highest absolute profit generated by the industry and the highest net profit margin at 5.1 per cent.

"This is the best performance in the industry's history - irrespective of the many uncertainties that we face," said Alexandre de Juniac, director general and chief executive officer of Iata on Thursday at the trade association's offices in Geneva.

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The record profit was based in airlines' efforts at structural improvements in profitability and returns on capital, aided by a boost from lower oil prices, said Brian Pearce, chief economist at Iata.

Passenger departures for 2016 are expected to hit 3.77 billion, 5.7 per cent higher than in 2015. Revenue passenger kilometres (RPK) also are to grow by 5.9 per cent to reach US$7.08 trillion in 2016.

The Asia-Pacific region will be the second best-performing one in 2016 after North America. Net post-tax profits will grow by 3.6 per cent to US$7.3 billion, or US$5.53 per passenger. RPK will grow 8.9 per cent.

Looking ahead to 2017, Iata expects a full-year net profit of US$29.8 billion amid rising oil prices. Other political, economic and security risks are also expected to cloud the global airline industry next year.

Though profitability is expected to weaken in 2017, Mr de Juniac sounded an upbeat note: "Even though we expect conditions to be more difficult, we see a soft landing safely in profitable territory."

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