Airlines expect to earn $25 bn in 2015

Geneva, Dec 11 (IANS/EFE) Airline companies can expect to achieve net profits of $25 billion in 2015, compared to the $19.9 billion they earned this year, the International Air Transport Agency (IATA) announced on Wednesday.

 

Approximately half the estimated profits for 2015, some $13.2 billion, will be generated in North America, IATA’s CEO Tony Tyler said at a press conference.

Estimates for the next year far exceed those obtained in recent years, such as 2013, when profits totalled $10.6 billion, as compared to just $6.1 billion in 2012.

IATA believes the improvement in profitability is largely due to the fall in the price of oil and the overall global improvement in gross domestic product (GDP).

Tyler recalled that in 2004, oil was at $40 per barrel and that it climbed $99 per barrel in 2008. From 2011 up to now, the price has held at around $100, but is expected to contract to $85 in 2015.

This figure is more than double the 2004 price, yet it still seems cheap. There is no doubt that the recent drop in oil prices has been a relief for airlines, Tyler added.

On his part, IATA Chief Economist Brian Pearce said the fact that these increases in profitability occurred even at a time when a barrel of oil fetched $100, showed that companies were able to function optimally regardless of the context.

The chief economist recalled that fuel represented 40 percent of operating costs for airlines.

In fact, IATA expects that when the data for 2014 is in, airfares will be shown to have fallen 5.1 percent excluding taxes and surcharges, and the price of cargo carriage will have been reduced by 5.8 percent.

Based on its estimates of 2015 profits and passenger traffic, IATA expects the airlines to post a net profit of $7.08 per passenger, up from this year’s figure of $6.02 and the $3.38 per passenger in 2013.

Regarding the situation in Latin America, IATA said the region is facing a mixed context in which weak local markets have hurt the airlines’ performance, but their relative level of consolidation and some success over long distances could push combined net profits to $1 billion in 2015, up from $700 million in 2014.