Net Profit of Middle East Airliners to Hit $1.7 Billion in 2016

15.12.2015 Aviation & Space
Net Profit of Middle East Airliners to Hit $1.7 Billion in 2016

Net Profit of Middle East Airliners to Hit $1.7 Billion in 2016

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Lower oil prices and healthy demand for travel will boost airline profits next year, with the Middle East expected to achieve $1.7 billion net profit in 2016 from $1.4 billion by year end, said the International Air Transport Association (IATA)

Net profits would reach global record levels of $36.3 billion in 2016 after $33 billion in 2015, with over half of the profits coming from North American carriers, IATA said in its airline industry outlook for 2016.

“This is a good news story. The airline industry is delivering solid financial and operational performance. Passengers are benefiting from greater value than ever - with competitive airfares and product investments. More people and businesses are being connected to more places than ever and employment levels are rising,” said Tony Tyler, IATA Director General and CEO.

The Middle East, however, is split between strong Gulf airlines, with successful long-haul super-connector operations, and regionally-focused airlines which are suffering from the impact of lower oil revenues and political conflict.

Profit per passenger of $7.97 forecast for 2016 is slightly less than that expected for European airlines and almost a third of what North American airlines are achieving. Overall the region is still generating double-digit growth. Capacity is expected to expand by 12.1% and 12.2%, respectively, in 2015 and 2016 largely as a result of growth in traffic over the region’s modern hubs.

North American carriers are leading the industry’s performance and are expected to generate considerably more than half the industry’s total profits in both 2015 ($19.4 billion) and 2016 ($19.2 billion). On a per passenger basis, profits of $21.44 in 2016 also places their performance at the top of the industry. This is as a result of a strong US economy, the appreciating US dollar, lower oil prices and a restructured industry. Capacity growth by North American airlines is expected to accelerate from 3.7 per cent in 2015 to 4.8% in 2016 on the strength of the US economy.

European airlines are expected to deliver performance improvements with net profits increasing from $6.9 billion in 2015 to $8.5 billion in 2016 while profits for the Asia-Pacific region are expected to grow from $5.8 billion in 2015 to $6.6 billion in 2016.

The performance of carriers in Latin America is weak on the back of the deepening economic crisis in Brazil, weak commodity prices and adverse currency fluctuations. The region is expected to finish 2015 with a $300 million loss, recovering to a $400 million profit in 2016.

Airlines in Africa are expected to be in the red in both 2015 and 2016 with losses of $300 million and $100 million, respectively. The region’s losses per passenger make its performance in 2015 worse than Latin America’s. Political instability is impacting important tourism markets in North Africa. The continent’s carriers in general suffer from weak economies and stiff competition on international markets. Growth is also weak, with a 0.4% capacity expansion expected for 2015 increasing to 1.6% in 2016.



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