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  • Chidozie Uzoezie

African Airlines to Lose USD10 Per Passenger in 2017 - IATA


The International Air Transport Association (IATA) announced that it expects the global airline industry to make a net profit in 2017 of $29.8 billion while Africa will experience weak performance.


On forecast total revenues of $736 billion, that represents a 4.1% net profit margin. This will be the third consecutive year (and the third year in the industry’s history) in which airlines will make a return on invested capital (7.9%) which is above the weighted average cost of capital (6.9%).


IATA revised slightly downward its outlook for 2016 airline industry profitability to $35.6 billion (from the June projection of $39.4 billion) owing to slower global GDP growth and rising costs. This will still be the highest absolute profit generated by the airline industry and the highest net profit margin (5.1%).

While airline industry profits are expected to have reached a cyclical peak in 2016 of $35.6 billion, a soft landing in profitable territory is expected in 2017 with a net profit of $29.8 billion. 2017 is expected to be the eighth year in a row of aggregate airline profitability, illustrating the resilience to shocks that have been built into the industry structure. On average, airlines will retain $7.54 for every passenger carried.


Carriers in Africa are expected to deliver the weakest financial performance with a net loss of $800 million (broadly unchanged from 2016). For each passenger flown this amounts to an average loss of $9.97. Capacity in 2017 is expected to grow by 4.7%, ahead of 4.5% demand growth. The region’s weak performance is being driven by regional conflict and the impact of low commodity prices.


Expected higher oil prices will have the biggest impact on the outlook for 2017. In 2016 oil prices averaged $44.6/barrel (Brent) and this is forecast to increase to $55.0 in 2017. This will push jet fuel prices from $52.1/barrel (2016) to $64.9/barrel (2017). Fuel is expected to account for 18.7% of the industry’s cost structure in 2017, which is significantly below the recent peak of 33.2% in 2012-2013.

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Comments (25)

Guest
Sep 21, 2022

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Guest
Sep 30, 2022

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kasarokcaesar
Oct 24, 2022

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Guest
Nov 10, 2022

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Guest
Nov 18, 2022

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Guest
Dec 04, 2022

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Guest
Dec 15, 2022

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Guest
Jan 07, 2023

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Guest
Aug 07, 2023
Replying to

Where is here.

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Guest
Jan 27, 2023

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Guest
Feb 27, 2023

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