TAROM CEO Christian Heinzmann forecast the carrier will return to profitability with RON92 million (EUR20.9 million) in profit in 2015 increasing to a profit of RON173 million (USD39.3 million) in 2016, according to a report from Bne. The carrier also plans to increase its passenger numbers to 2.6 million by 2016, up from the 2.3 million it expects to transport this year, and load factor of 75%, up from the 64% to 65% at present. In 2013, TAROM is forecasting a loss of RON143 million (EUR32.5 million), compared to previous forecast of a RON252 million (EUR57.3 million) loss, while losses in 2014 is estimated to reach RON18 million (EUR4.1 million). To achieve the carrier’s targets, Mr Heinzmann said the carrier will carry out several measures including introducing new marketing strategy and new route network, “renegotiate some slots so as to carry out only profitable flights.” Other measures include improving IT systems and introducing voluntary redundancy as it aims to cut its labour force by 10%. Mr Heinzmann believes the carrier should have about 1500 employees by 2015.
TAROM targeting return to profitability in 2015, outlines measures to achieve target
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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