The International Air Transport Association (IATA) said global airlines will post their possibly strongest profit margin within the span of over 5 years in 2015, helped by the continuous reduction of fuel prices as well as the stronger economic growth.
IATA, Geneva-based group and representing nearly 250 airlines accounting for 84% of international air traffic, stated that net profit will jump to 25 billion US dollars in 2015, a profit margin equivalent to 3.2%. The last high margin reported by the association was in 2010, reaching 3.1%.
Tony Tyler, IATA Director General said the industry viewpoint is improving, thus, international economy continually recovers, while the drop in oil prices must strengthen the growth in 2015. However, the director noted a caution, saying that a 3.2% net profit margin does not mean there’s enough room for deterioration within the external environment before profit is hit.
The association’s profit forecast was increased to 19.9 billion dollars for 2014, higher than last year’s 18 billion. Also, airline stocks jumped in the recent weeks due to falling oil prices.
IATA’S outlook globally also reflects opposing fortunes for airlines in various parts of the globe. The North American airlines went through a consolidation and restructuring period, and are forecast to generate the highest profit margin of 6% in 2015.
In Europe, on the other hand, had a forecast profit margin of 1.8% due to intense competition according to IATA. Europe’s biggest airline company by revenue, the Lufthansa, has cut its profit target for 2015, also due to intense competition and economic slowdown.