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Airlines forecast to reap record profits in 2014

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Airlines forecast to reap record profits in 2014
Airlines are expected to fill more seats. Photo: IATA
14:58 CET+01:00
Airlines are expected to post record profits in 2014, the Geneva-based International Air Transport Association said Thursday, citing sliding oil prices and mergers for the sector's improving outlook.

"The industry's fortunes are improving," IATA chief Tony Tyler said at the umbrella body's Swiss base.
   
"Today we are raising our global profit outlook for this year to $12.9 billion (9.4 billion euros). And we see that increasing to $19.7 billion next year," he told reporters.
   
The figure for 2013 was $1.2 billion better than a forecast issued in September, and $3.3 billion over the previous prediction for 2014, he noted.
   
"This is being led primarily by a slight fall in the high price of oil and the positive impact that mergers and joint ventures are having, generating better connectivity for passenger and driving efficiency," Tyler said.
   
If the 2014 forecast turned out to be accurate, it would be the sector's highest-ever profit figure, he underlined.
 
But Tyler also struck a note of caution, saying that while the figure is large it is shared among hundreds of airlines.

"They will take in $743 billion in revenues by transporting some 3.3 billion passengers," he noted, saying that the sector would hardly be rolling in cash.
   
"Even a simple division of the profit by the number of passengers will quickly show that the industry will be taking a little less than six dollars per passenger carried," he explained.
   
IATA forecast that the average rate of profitability of the globe's airlines should reach 2.6 percent in 2014, up from 1.8 percent this year and 1.1 percent in 2012, when the sector turned a profit of $7.4 billion.
   
"In 2012, we could afford a coffee, in 2013 a sandwich and in 2014, maybe both," Tyler said.
   
Passenger traffic should be stronger than originally predicted this year, IATA said.
   
Passenger volumes should rise by around 5.4 percent per year over the next five years, it added.
   
But air-freight levels remain weaker, IATA said, forecasting average annual growth of 3.2 percent.
   
"Clearly, much uncertainty remains in relation to the global economic and financial environment, but there are a number of important positive developments," IATA added.
   
Among them, it said, were the fact that the United States was building "a solid foundation for sustained growth," that the eurozone was emerging from a protracted recession and that global sentiment was being buoyed by China.
   
"These dynamics are all supportive of the outlook for air transport services --- both passenger and freight -- over the five year forecasting horizon, to 2017," IATA said.
   
US airlines should post good results in 2014, with profits expected to hit $8.4 billion, up from a forecast $5.8 billion this year.
   
Asian carriers are expected to hold the second rung on the ladder, though the gap between them and US airlines is expected to widen, with forecast profit of $4.1 billion in 2014, up from an estimated $3.2 billion this year and $4 billion in 2012.
   
European airlines, meanwhile, are seen as making major progress, with profits expected to hit $3.2 billion in 2014, up from $1.7 billion this year, outstripping the $400 million of 2012 and $300 million of 2011.

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