The International Air Transport Association (IATA) has revised slightly downwards its earnings forecast for the industry this year to US$18.7 billion, down from the previous forecast of $19.7 billion, according to Shipping Gazette.
In spite of this IATA is confident that the global airline sector remains on track to deliver a second consecutive year of improved profitability, reported Arabian Aerospace online news service.
The main driver of the downward revision is higher oil prices which are now expected to average $108.0/barrel (Brent), or $3.5/barrel higher than previous projections.
The $3 billion extra on the industry's fuel bill is expected to be mainly offset by stronger demand, particularly, for cargo on the back of a strengthening global economy.
Overall industry revenues are expected to rise to $745 billion, which is $2 billion greater than earlier projections.
"In general, the outlook is positive. The cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geo-political instability," said IATA's director general and CEO Tony Tyler.
"Overall industry returns, however, remain at an unsatisfactory level with a net profit margin of just 2.5 per cent."
Cargo demand is showing the biggest improvement. Demand growth has been revised to four per cent, up from the previously forecast 2.1 per cent growth in 2014.
Trading conditions remain challenging, but positive macro-economic trends are providing a much-needed boost. There are, however, several major changes, which continue to challenge the cargo business.
The recent trend is for air cargo, world trade and industrial production to grow in tandem. Yet, the industry is growing more slowly than normal at this stage of the economic cycle.
-
Company DirectoryFreight RateExport RateAgency PartnershipCargo Leads