IATA expects airline profits to hit $18B in 2014

DOHA, Qatar – The International Air Transport Association (IATA) said on Monday, June 2, that it expects airline companies to record combined net profits of $18 billion 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% only.

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

This amounted to less than $6 per passenger, added Tyler, who was speaking at an IATA-organized 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% – up from 1.4% in 2008,” said Tyler.

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

He said there was still huge potential for development in the sector.

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

Tyler said the industry was celebrating 100 years of aviation in which 3.3 billion passengers will have travelled and 52 million tons of cargo transported.

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. – Rappler.com