tiptrot.com September 21, 2017

IATA Ups 2017 Airline Profit Forecast

07 June 2017, 10:46 | Bernice Figueroa

A Malaysia Airlines Airbus A330

Malaysia Airlines Airbus A330 9M-MTD in Melbourne in 2011

Alexandre de Juniac, director-general of the International Air Transport Association (Iata), said the weekend's violence in London could discourage potential visitors as similar attacks did in Europe past year.

"While revenues is increasing, earnings are being squeezed by rising fuel, labour and maintenance expenses". Malaysia Airlines offered refunds to customers flying into London until yesterday, chief executive Peter Bellew said.

The United States led the industry's financial forecast, with expected profits of US$15.4 billion this year.

But airlines are unhappy with the bans, which affect 10 airports in eight countries, in the case of the USA ban, and six countries in the case of Britain's.

That will boost passenger numbers by about 275 million to 4.1 billion and - crucially - ensure traffic expansion exceeds planned capacity hikes, spurring the average load factor or occupancy level to 80.6 percent, up from 80.3 percent in 2016.

Lost productivity caused by passengers' inability to work on affected flights is costing an estimated US$180 million a year, he said.

"And the US$7.69 average profit per passenger sell does not provide a thick buffer to economic shocks", he said at the meeting being held in the resort of Cancun on the Caribbean coast. "That's why airlines must remain vigilant against any cost increases, including from taxes, labor and infrastructure".

Despite disappointing results from individual carriers, Asia-Pacific airlines are expected to post a $US7.4 billion net profit ($US4.96 per passenger), down from $US8.1 billion in 2016, amid a 10.4 per cent surge in passenger demand. Latin America and Middle East carriers are expected to earn $800 million and $400 million respectively. A major achievement on safety performance in 2016 was in Sub-Saharan Africa, which registered no jet hull losses.

Passenger demand is expected to grow by 7.4% over the course of 2017. "This year, Mexico has reached a historic record in tourism, and it is thanks to the vital role of air connectivity", he said.

The global spend on tourism enabled by air transport is expected to grow by 5.2 per cent in 2017 to $685bn. Our aircraft carry 150,000 tonnes of cargo - the input and output of the global economy. There are also retail trends, such as the switch to e-commerce and in pharmaceuticals, which are supporting air cargo growth.

If it were extended to flights between the U.S. and Europe, the lost revenue would total around $1.4 billion, it estimates.

Some regions will still see some modest benefits from hedges but this will be insufficient to offset the rise of other operating costs, according to IATA. Last year productivity gains offset wage increases, but this year we expect unit labor costs to rise by nearly 3 per cent, continuing what has already been evident in the first quarter. That will lead to jet kerosene prices averaging $64.0/barrel this year.

"I don't really think it impacts us too much at all because I think there's bigger things than just the security concerns that people have that weigh on their mind". It fell in year-on-year terms by 2.8% for the month.

"We have a busy year ahead", Goh said in a statement.

"In parts of the world, nationalistic political rhetoric points towards a future of more protectionism", he said.

MOre than 1800 new aircraft will be delivered in 2017.

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