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  HOME | Business & Economy (Click here for more)

Global Airline Industry 2017 Earnings Drop 2.3%, Better 2018 Outlook

GENEVA – The International Air Transport Association said in its end-of-year report on Tuesday that 2017 international airline industry earnings would total $34.5 billion, or 2.3 percent less than last year, but forecast a $38.4 billion profit for 2018, or 11.3 percent more.

IATA’s 2017 annual report and 2018 industry forecast said this year’s results would be lower than those of 2016, but better than June’s appraisal when it put 2017 profits at around $31.4 billion.

“These are good times for the global air transport industry. Safety performance is solid. We have a clear strategy that is delivering results on environmental performance,” said Alexandre de Juniac, IATA’s Director General and CEO.

De Juniac added that “demand for air cargo is at its strongest level in over a decade. Employment is growing. More routes are being opened. Airlines are achieving sustainable levels of profitability,” but also warned this was “a tough business, and we are being challenged on the cost front by rising fuel, labor and infrastructure expenses.”

IATA considers that strong demand, efficiency and reduced interest payments could help airlines improve net profitability in 2018, despite rising costs.

The number of air passengers will experience a positive turn, increasing from 3.6 billion passengers in 2016 to 4.1 billion passengers in 2017, with 2018 foreseeing a 6 percent increase to 4.3 billion passengers.

On a per passenger basis, airlines will earn an average of $8.90 compared to $8.45 in 2017, although both figures are worse than last year’s $9.26.

As regards to air freight, carried cargo grew to 62.5 million tons, up 4.5 percent on the 59.9 million tons in 2017.

According to IATA’s CEO, the airline industry also faces longer-term challenges: “Aviation is the business of freedom and a catalyst for growth and development,” de Juniac said.

“It remains a tough industry and the airlines must still face increased fuel, staff and infrastructure costs,” de Juniac said.

Regardless, commercial airlines are expected to take delivery of around 1,683 new aircraft this year, a substantial investment on the part of the industry, though less than forecast in previous reports.

Sustained high fuel costs have made economic sense to retire older aircraft at a higher rate, and around half of this year’s deliveries will replace existing fleets, making a significant contribution to increasing fleet fuel efficiency.

IATA expects 1 percent of world GDP to be spent on air transport in 2018, totaling $861 billion.

 

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