IATA expects airline profits to hit $18 bn in 2014

The International Air Transport Association said Monday it expects airline companies to record combined net profits of $18 billion (13 billion euros) this year.

Revenues were forecast to reach $746 billion, IATA director general Tony Tyler said in Doha, pointing out that net margins stood to average 2.4 percent only.

"It sounds impressive. But the brutal economic reality is on revenues of $746 billion dollars we will earn an average net margin of just 2.4 percent," he said.

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This amounted to less than $6 per passenger, added Tyler, who was speaking at an IATA-organised annual conference of the airline industry in the Qatari capital.

"The good news is that airline profits are improving. The average return on invested capital today is 5.4 percent -- up from 1.4 percent in 2008," said Tyler.

"But we are still far from earning the 7-8 percent cost of capital that investors would expect," he added.

He said there was still huge potential for development in the sector, saying that easing certain regulations could help.

IATA has long complained of the difficulty of consolidating the sector, as some countries have placed restrictions on investing in European and American companies.

Carriers have managed to partially get around the problem by creating alliances such as Skyteam, Oneworld and Star Alliance, although the industry is still fragmented.

"Our customers expect efficient global connectivity. But the regulatory structure prevents the global consolidation that has happened in other industries," Tyler said.

Qatar Airways CEO Akbar al-Baker, who headed IATA's general assembly this year, also stressed the importance of the sector for development in certain countries.

He urged the newly elected Indian government "to see aviation as a very important tool for economic growth in India".

IATA said in March that some 240 carriers representing 84 percent of global air traffic had revised down their profit forecast for 2014 to $18.7 billion from $19.7 billion.

Tyler stressed the need to work on security in the industry, particularly in the wake of the disappearance of Malaysia Airlines Flight MH370.

MH370 disappeared on March 8 en route from Kuala Lumpur to Beijing with 239 people aboard. An extensive search in the Indian Ocean has found no trace of the plane.

"A large commercial airliner going missing without a trace for so long is unprecedented in modern aviation. And it must not happen again," Tyler said.

IATA and "experts from around the world are working together to agree on the best options to improve global tracking capabilities," he added.

Tyler said the industry was celebrating 100 years of aviation this year, and was expecting to carry 3.3 billion passengers and transport 52 million tonnes of cargo this year.

In total, some 50,000 destinations are linked through around 100,000 daily flights, while the industry generates more than 58 million job opportunities worldwide.

© 2014 AFP

Source: AFP
Date: Jun 2, 2014