IATA Lifts 2015 Global Airline Profit Forecast

IATA has raised its forecast for 2015 industry profits by more than 17 percent to USD$29.3 billion, almost double those from last year.
IATA said lower oil prices was the main factor pushing the industry further into the black, but the windfall could be muted by the rise in the value of the US dollar and widespread airline fuel hedging.
"The industry's profits are far from uniform. Many airlines still face huge challenges," IATA Director General Tony Tyler said in a declaration to the airline lobby's annual meeting.
IATA had previously forecast a USD$25 billion profit for 2015.
It said the industry's average net profit margin would almost double to 4 percent from last year's 2.2 percent. It saw the fuel bill down to USD$191 billion from USD$226 billion in 2014, when airlines made a restated profit of USD$16.4 billion.
At the same time, planes are expected to fly fuller than ever before as the industry matches capacity to demand, though some airline bosses meeting in Miami are worried such discipline could start to fray.
"A focus on efficiency is seeing supply matched more closely than ever with demand and is expected to produce a record high load factor of 80.2 percent," IATA said.
The forecasts came alongside figures showing that airlines are set for a significant breakthrough in 2015, delivering returns on capital invested in them that exceed the average cost of that capital for the first time in the industry's history.
Although some airlines generate significant profits when the economy is strong, high costs such as for staff and fuel, and intense competition, have given air transport a chronic reputation for destroying value for investors.
This year, the industry, which employs 2.5 million people, is expected to generate USD$4.9 billion of value for investors, helped by restructuring and low interest rates, IATA said.
But it noted that high returns are not widespread outside North America where, unlike many foreign rivals, airlines have felt the full benefit of cheaper fuel denominated in dollars.
An expected 7.5 percent net profit margin in North America, on profits of USD$15.7 billion, contrasts with profit margins of 2.5 and 2.8 percent in Asia and Europe respectively.
Asian carriers are exposed to the downturn in the cargo industry and China's slowdown, while Europe is hurt by the weaker euro.

Source
Reuters