BOC Aviation head of strategy and market research Peter Negline, in an IATA analysis viewpoint discussion, stated (25-Oct-2011) the "world economy stands amidst a great uncertainty caused by the broad lack of confidence and trust in governments of developed countries". Mr Negline noted there are a number of challenges facing the industry, which will grow in importance over the coming two years. He noted the growing appetite for fuel efficient aircraft, expectations of US dollar weakness along with some other issues has led commercial aircraft orders and deliveries to rise to a new peak, although "financing may prove to be a challenge". More positively he noted there are "signs that the airline sector is better placed to handle near term financial risks and to protect profit margins over the longer term, although much rests in the hands of politicians". [more - original PR]
Airline sector better placed to handle near term risks & protect magins in long-term: BOC Aviation
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CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.
Global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn