Tuesday 6 June 2023

ME airlines to see net profits balloon to $1.3bn

SYDNEY, June 5, 2018

Middle East airlines are expected to see net profits grow to $1.3 billion this year, an industry expert revealed, attributing the boost to a number of factors.

According to a statement released by the International Air Transport Association (Iata), the rise of oil prices is helping revenues and the oil-based economies in the region.

"Airlines in the region are generating a recovery, boosted by improved aero-political relations with the US," it said.

In 2017, airlines in the Middle East saw a $1 billion rise in profits. With Iata's new forecasts, the region can expect 2018 net profits to jump up 30 per cent.

For airlines around the world, Iata forecasts that collective net profits will reach $33.8 billion (4.1 per cent net margin) this year.

This may seem like a 'solid performance despite rising costs, primarily fuel and labour', but the new figures are a downward revision from the previous forecast of $38.4 billion in December 2017.

"Solid profitability is holding up in 2018, despite rising costs. The industry’s financial foundations are strong with a nine-year run in the black that began in 2010. And the return on invested capital will exceed the cost of capital for a fourth consecutive year. At long last, normal profits are becoming normal for airlines," said Alexandre de Juniac, Iata’s director general and CEO.

The demand for air travel is expected to grow by 7 per cent in 2018, lower than the 8.1 per cent growth that the industry recorded in 2017 but still faster than the 20-year average (of 5.5 per cent) for the sixth consecutive year.

In 2018, airlines are expected to carry a total of 4.36 billion passengers, up 6.5 per cent from 4.1 billion registered in 2017.

Cargo demand is expected to grow by 4 per cent, a major drop from the 9.7 per cent growth experienced in 2017, but it remains in line with the 20-year trend growth rate.

Moreover, with over 1,900 aircraft expected to be delivered to airlines in 2018, there will be a boost in capital expenditure, Iata said. -TradeArabia News Service

Tags: Iata | profit | Airlines | Net | Middle | East |

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