Stronger profits for airline industry in 2015, and 2016: Iata

THE International Air Transport Association (Iata) has revised its airline industry profit outlook for 2015 upwards from US$29.3 billion to US$33 billion, citing cheaper fuel, robust passenger demand as well as the stronger economic performance in the US and Europe.

Profits are expected to rise further next year, clocking US$36.3 billion and a profit margin of 5.1 per cent.

This year, Brent oil prices are expected to average US$55 per barrel, and ease to US$51 per barrel in 2016.

Tony Tyler, chief of Iata, said: "This is a good news story. The airline industry is delivering solid financial and operational performance. Finally our shareholders are beginning to enjoy normal returns on their investments."

Other than cheaper fuel, other tailwinds for 2016 include a slight improvement in global GDP growth, which is expected to clock 2.7 per cent next year, as well as robust expansion in passenger travel.

However, yields will continue to come under fire, depressed by intense competition, the airline association warned.

Meanwhile, the industry's return on capital for this year and next is expected to hit 8.3 per cent and 8.6 per cent, respectively.

But Mr Tyler cautioned celebrating too soon, stressing that the industry's profitability remains fragile, given slim profit margins.

This year, North American carriers are expected to post the strongest profits of US$19.4 billion, while Europe's carriers are in second place at US$6.9 billion, in line with improvements in their respective economies.

However, Asia-Pacific carriers will see profits of US$5.8 billion, owing to the slower cargo industry.

Meanwhile, both Latin American and African carriers are expected to sink into the red this year.