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12-Dec-2016 9:27 AM

IATA: Airlines to achieve positive ROIC for third consecutive year in 2017

IATA forecast (09-Dec-2016) airlines will generate a "solid" 7.9% return on invested capital (ROIC) in 2017, delivering a third successive year, and only the third year in total, where ROIC exceeds the cost of capital. 2017 operating conditions for airlines are expected to be more difficult, with higher fuel costs and a still relatively weak global economic backdrop. Such factors contribute to a modest decline in the expected ROIC from an estimated 9.4% in 2016. The industry's stronger ROIC performance in recent years has not just been due to lower fuel costs. Airlines have also made important changes to keep load factors above break-even rates, and have improved capital productivity significantly. This investment in restructuring and re-engineering the business has ensured that the
industry is also more resilient and gives support to the notion that the recent financial performance can be sustained even as oil prices rise. [more - original PR]

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