IATA Ups 2017 Airline Profit Forecast

IATA raised its airline industry profitability outlook for 2017, citing strong overall performance.

The International Air Transport Association (IATA), which represents 275 of the world’s airlines, now expects profits of USD$31.4 billion for the calendar year, up from its previous forecast of $29.8 billion. Revenue will increase to $743 billion, from $736 billion forecast previously.

“This will be another solid year of performance for the airline industry. Demand for both the cargo and passenger business is stronger than expected,” IATA Director General Alexandre de Juniac said. “Airlines are still well in the black and delivering earnings above their cost of capital. But, compared to last year, there is a dip in profitability.”

IATA expects airlines to retain a net profit of $7.69 per passenger, down from $9.13 in 2016 and $10.08 in 2015.

“For a third year in a row we expect returns that are above the cost of capital. But, with earnings of $7.69 per passenger, there is not much buffer, de Juniac said.

Half the industry’s profits are generated in North America, $15.4 billion, with European and Asia-Pacific regions each adding a $7.4 billion profit to the industry total. Latin America and Middle East carriers are expected to earn $800 million and $400 million respectively, but airlines in Africa are expected to post a $100 million loss.

Passenger demand is expected to grow by 7.4 percent in 2017, the same growth rate as 2016. That is 2.3 percentage points higher than IATA’s previous forecast.

Cargo demand is expected to grow by 7.5 percent in 2017, more than double the 3.6 percent seen in 2016 and 4.0 percentage points above the previous forecast.

IATA is holding its World Air Transport Summit this week in Cancun.