IATA predicts profit improvement in 2016

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International Air Transport Association's director general and chief executive officer, Tony Tyler

The International Air Transport Association (IATA) has revised its 2016 financial outlook upwards to $39.4 billion, due to airlines improving efficiency and low oil prices, following a better than expected result in 2015.

The association says airlines this follows improvements in 2015, where profits were revised upwards to $35.3 billion, with North America performing most strongly. The industry has been helped by low oil prices, which averaged $54 a barrel in 2015, and are expected to average $45 this year.

IATA director general and chief executive officer, Tony Tyler says: “Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices. Performance, however, is being bolstered by the hard work of airlines.”

Tyler adds airlines have been improving efficiency through measures such as joint ventures, helping both consumers while investors are receiving better returns.

The industry is facing good and bad news, as cargo is continuing to struggle with slow growth and overcapacity caused by more wide-body aircraft entering fleets to cater for passenger demand. Cargo yields are expected to fall by eight per cent in 2016 and revenue is predicted to fall to $49.6 billion from $52.8 billion in 2015.

Globally, the picture remains mixed, with North America expected to make the largest profits and continue to grow, and others may see some improvement. Asia Pacific is expected to struggle due to the cargo market stagnating, while Latin America will continue to suffer from the crises in Brazil in Venezuela.