x Abu Dhabi, UAESunday 23 July 2017

Middle East airlines to gain as Iata forecasts bumper year

Middle Eastern airlines are expected to post profits of US$1.4 billion this year, a rise of more than 55 per cent from 2012.

Middle Eastern airline profits are expected to rise by more than half this year to US$1.4 billion (Dh5.14bn) as they extend their routes around the globe.

The International Air Transport Association (Iata), which represents about 80 per cent of global carriers, expects the industry to record a net profit of US$10.6bn this year, up from an earlier forecast of $8.4bn, and substantially more than the $7.6bn achieved last year.

Airlines in the Middle East are expected to exceed the previous profit estimate of $1.1bn, increasing more than 55 per cent on the $900 made last year, according to Iata.

"The region's carriers rank third in terms of operating profitability with an earnings before interest and taxes margin of 3.4 per cent, after Asia Pacific [5.3 per cent] and North America [4.1 per cent]," said Iata. Asia-Pacific region airlines are expected to make the largest contribution in the industry, with an anticipated $4.2bn in net profits this year, up from the previously projected figure of $3.2bn and the $3.9bn recorded last year.

Carriers in North America may post $3.6bn in profits, slightly ahead of the $3.4bn previously predicted and a 56.5 per cent increase on last year.

Europe is expected to record $800m in profits this year compared to $300m last year.

But the figure is only 0.4 per cent of revenues and "barely different" from its previous projection, according to IATA.

Latin American carriers should generate $600m in profits, the only region to decline compared with December's forecast, and African airlines are expected to record $100m in profits this year, up from a previous prediction that they would only break even.

Tony Tyler, Iata's director general and chief executive, said the improvements in industry profitability were encouraging, but must be kept in perspective.

"We are projecting that airlines will make a net profit of $10.6bn on $671bn in industry revenues. By comparison, last year Nestlé, a single company, made more than $11.5bn in profit on revenues of about $100bn," said Mr Tyler.

"Chronic anaemic profitability is characteristic across most of the aviation value chain when compared to other sectors.

"It will require more than improving economic conditions to fix. Neither the challenges nor the benefits of doing so should be underestimated."