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IATA says Middle East airline net profit will double in 2018

07 December, 2017, 02:00 | Author: Melinda Barton
  • IATA Director General Alexandre de Juniac speaks during the Global Media Day in Geneva

While passenger numbers will rise six per cent next year, this year has seen an increase of 7.5 per cent. A strong upcycle in the cargo markets will also support the expected profit improvement next year, it added.

Overall profits are expected to rise 11 percent to $38.4 billion in 2018, and the outlook is encouraging, IATA said on Tuesday as it raised its 2017 forecast to $34.5 billion, up from an earlier $31.4 billion estimate, but still lower than 2016.

The growth in passenger numbers for SA (international and domestic) was expected to be between 3% and 4% a year for the next five years, according to projections by Airlines Association of Southern Africa.

European airlines generate the second-most revenue when compared by region and made $9.8 billion in net profits this year. She highlighted examples such as for the last mile for small parcel deliveries, transporting goods to remote or isolated areas and on routes which are not economically viable for larger aircraft.

"It's still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses".

All regions are expected to post improved profits year-on-year in 2018 with the North American carriers leading the pack at US$16.4 billion, which is almost half of the collective bottom line.


Freight volumes are still expected to grow in 2018, although at a slower pace than in 2017. The association expects oil prices to average $60 for a barrel of Brent Crude - a rise of 10.7%t on this year, taking oil-related costs up from 18.8% to 20.5%.

"The industry also faces longer-term challenges". In September, global passenger demand had increased 6.6 percent from the previous month.

Strong demand, efficiency and reduced interest payments would help airlines improve net profitability in 2018 despite rising costs.

However, IATA said it was not concerned there was a pilot shortage after high-profile cancellations at Ryanair and American Airlines due to rostering issues and after some USA airlines awarded high pay increases to pilots this year.

"By bringing together people of different backgrounds and cultures to do business, to learn from one another and to solve problems, aviation provides vast value beyond what can be calculated".

Meanwhile, Pearce told The Edge Financial Daily that competition remains intense in Southeast Asia, which generally depresses profitability.

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