All regions are expected to see an improvement in profitability in 2015 compared with 2014. There are, however, stark differences in regional economies, which are also reflected in airline performance. “The industry’s fortunes are far from uniform. Many airlines still face huge challenges,” said Tony Tyler, IATA’s Director General and CEO.
Over half the global profit is expected to be generated by airlines based in North America ($15.7 billion). For North American airlines, the margin on earnings before interest and taxation (EBIT) is expected to exceed 12%, more than double that of the next best performing regions of Asia-Pacific and Europe.
“For the airline business, 2015 is turning out to be a positive year. Since the tragic events of September 2001, the global airline industry has transformed itself with major gains in efficiency. This is clearly evident in the expected record high passenger load factor of 80.2% for this year. The result is a hard-earned 4% average net profit margin. On average, airlines will retain $8.27 for every passenger carried,” said Tony Tyler, IATA’s Director General and CEO.
All regions will see improved profitability in 2015 compared with 2014. They will also see capacity expansions but these are expected to broadly match the expansion in demand. This aligns with the global expectation for capacity to expand 6.2%, slightly behind the projected 6.7% increase in demand. Aside from these few similarities, the regions are expected to deliver widely divergent levels of profitability.
Middle Eastern airlines are expected to post a collective $1.8 billion net return for 2015 for an average net margin of 3.1% ($9.61/passenger). The region’s carriers are expected to see a 12.9% growth in passenger numbers this year, the only region with a double-digit expansion. Airlines in the region have mixed fortunes, some loss-making, others profitable. An improvement in profitability is also expected to be driven by lower fuel costs.
African airlines are expected to post a collective profit of $100 million for a net margin of 0.8% ($1.59/passenger), the thinnest of all regions. Although in the black, this continues the relatively poor performance of the past few years. Last year, traffic growth for African airlines was weak because of various problems that disrupted tourism, but market share also continues to be lost. Currencies have been weak, particularly for oil exporters, so the benefits of lower fuel prices will be limited in this region. African airlines are also expected to see the slowest growth among developing markets with capacity and demand expansion of 3.3% and 3.2% respectively this year.