Strong airline profitability continues in 2018: IATA

The International Air Transport Association (IATA) forecasts global industry net profit to rise to $38.4 billion in 2018, an improvement from the $34.5 billion expected net profit in 2017 (revised from a $31.4 billion forecast in June).
 
Highlights of expected 2018 performance include:

A slight decline in the operating margin to 8.1% (down from 8.3% in 2017)

An improvement in net margin to 4.7% (up from 4.6% in 2017)

A rise in overall revenues to $824 billion (+9.4% on 2017 revenues of $754 billion)

A rise in passenger numbers to 4.3 billion (+6.0% on the 4.1 billion passengers in 2017)

A rise in cargo carried to 62.5 million tonnes (+4.5% on the 59.9 million tonnes in 2017)

Slower growth for both passenger (+6.0% in 2018, +7.5% in 2017) and cargo (+4.5% in 2018, +9.3% in 2017) demand
International tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years.

The value of goods carried by airlines is expected to exceed $6.2 trillion in 2018, representing 7.4% of world GDP.

Middle East carriers are forecast to see net profits improve to $600 million in 2018 (up from $300 million in 2017).

Demand in 2018 is expected to grow by 7.0%, outpacing announced capacity expansion of 4.9% (the slowest growth since 2002).

The region’s carriers face challenges to their business models, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the US, and competition the new "super connector" (Turkish Airlines).
 
Despite the challenges, there is positive momentum heading into 2018.

"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. More people than ever are traveling. The 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. It’s still, however, a tough business, and we are being challenged on the cost front by rising fuel, labor and infrastructure expenses," said Alexandre de Juniac, IATA’s Director General and CEO.

"The benefits of aviation are compelling 2.7 million direct jobs and critical support for 3.5% of global economic activity. And the industry is ready to partner with governments to reinforce the foundations for global connectivity that are vital to modern life," said de Juniac.

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