Aviation Lease and Finance Co (ALAFCO) reported a 5.9% year-on-year increase in net profit to USD38.4 million for the 12 months ended 30-Sep-2010 which, according to Chairman Ahmad Alzabin, is attributable to the leasing company’s “expansion in regional and international markets” (Arabian Business, 24-Nov-2010). ALAFCO also reported a 46% increase in operating profit and a 37% increase in total assets to USD1.9 billion as at 30-Sep-2010. The leasing company increased its fleet from 26 to 40 and is targeting a fleet of 59 owned and managed aircraft by the end of fiscal year.
ALAFCO FY2010 net profit up 6%
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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