24-Sep-2013 11:21 AM

IATA projects industry profitability of USD16.4bn in 2014, Industry 'not yet at sustainable levels'

IATA released (23-Sep-2013) the following revised industry outlook for 2014:

  • Revenue: USD743 million, +4.9% year-on-year;
  • Profit: USD16.4 billion, +40%;
  • Return on invested capital: 5.2% (below the industry’s weighted average cost of capital of between 7% and 8%);
  • Global GDP growth: 2.7%, + 0.7 ppts;
  • Oil prices: USD105 per barrel (Brent), down USD4 per barrel (-3.7%);
  • Passenger traffic growth: 5.8%, +0.8 ppts;
  • Cargo growth: 3.7%, +2.8 ppts.
  • Yields:
    • Passenger: -0.5%, down from no change forecast for 2013
    • Cargo: -2.1%, decelerating from the forecast 4.9% decline in 2013.

Regional outlook: All regions will see improved profitability, but "divergence in performance will remain" as follows:

  • North America: USD6.3 billion profit. Strongest performance of any region, with capacity discipline expected to see yields improve, “bucking the global trend”;
  • Europe: USD3.1 billion profit. EBIT margin of 1.9%, second lowest of any region;
  • Asia-Pacific: USD3.6 billion profit, predominately based on improved cargo performance, the growing Chinese domestic market and the benefits of restructuring in Japan;
  • Middle East: USD2.1 billion profit forecast, all-time regional high;
  • Latin America: USD1.1 billion profit;
  • Africa: USD100 million profit, reversing forecast losses in 2012. [more - original PR]

IATA: “A $16.4 billion profit for transporting some 3.3 billion passengers means that airlines will retain an average of about $5.00 per passenger. That very simple calculation demonstrates that even a small change in the operating environment—a new tax or other cost increase  for example—could change the outlook quite significantly,” Tony Tyler, director general and CEO. Source; IATA, 23-Sep-2013.