Frankfurt - Airlines would generate record earnings next year as they reaped benefits from mergers and joint ventures, the International Air Transport Association (Iata) said yesterday.
Carriers would earn a combined $19.7 billion (R204bn) in net income, up from a September projection of $16.4bn, Iata said. This year’s figure would be about $12.9bn, versus a prior forecast of $11.7bn, it said.
“The industry’s fortunes are improving,” Iata chief executive Tony Tyler said in a speech in Geneva, adding that earnings would amount to 2.6 percent of revenue next year, or $5.94 for each passenger carried.
North American carriers would make the most profit, generating $5.8bn this year and $8.3bn in 2014, Iata said, aided by the formation of American Airlines Group from a merger of AMR and US Airways. The deal, which created the world’s largest carrier, followed Delta Air Lines’ takeover of Northwest Airlines and the merger of UAL with Continental Airlines.
“Airlines in North America are expected to have a good year in 2014 as a stronger US economy coincides with a consolidated industry,” Iata chief economist Brian Pearce said.
European carriers would post net income of $1.7bn this year and $3.2bn next year, while Asia-Pacific operators should lift earnings to $4.1bn in 2014 from $3.2bn in the current 12 months, the industry body said.
Airlines in Latin America would more than double their net income to $1.5bn next year, and carriers in Africa would earn money for the first time since 2010, Iata forecast.
The cost of jet fuel would fall to an average $120.60 a barrel next year from $124 this year as tensions related to Iranian nuclear development eased and North America added supply, Iata forecast. That is still more than double its 2009 low.
The number of airline passengers would rise an average 5.4 percent a year through 2017, led by growth in the Middle East and Asia-Pacific, Iata said earlier this week, taking the total to 3.91 billion travellers, a quarter more than the estimate for this year.
Growth in air freight would slow to an average 3.2 percent a year in the coming years, Iata forecast yesterday, with China overtaking Germany as the second-biggest air freight market by 2017, behind only the US.
That would create challenges for Asian carriers, whose combined net income would grow 28 percent next year, the slowest regional gain, it said.
Airlines would generate $708bn in sales this year and $743bn next year, and would be unprofitable without ancillary revenues of an estimated $13 for each passenger, Iata said.
“It’s a tough environment in which to run an airline,” Tyler said. “Competition is intense and yields are deteriorating. We must temper our optimism.” – Bloomberg