Airlines: Summary Of IATA Expectations For 2015

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Includes: ALK, HA, JBLU, LUV, RYAAY, SKYW
by: Fred Piard

The International Air Transport Association (IATA) represents about 250 airlines and 84% of total air traffic. In a press release published on December 10th 2014, it quantifies the consequences of the worldwide GDP growth and the fall in oil price. The projected collective profit is $19.9 billion for 2014 (up 11% from previous expectations in June) and $25 billion for 2015. Consumers will also benefit from the situation: average prices are expected to fall by 5.1% for passengers and 5.8% for cargo next year. Airlines are expected to make an average net profit per passenger of $7.08 in 2015, up 17.6% from 2014 and 109% from 2013. It represents a 3.2% profit margin.

IATA expects the jet fuel barrel to stay close to $100 in 2015, representing 26% of industry costs. Passenger traffic should grow by 7% and cargo traffic by 4.5%.

The next table shows that the average net profit margin of North American companies is far ahead of other regions.

Region

Net profit 2014 ($billion)

Projected net profit 2015

Project net profit margin 2015

North America

11.9

13.2

6%

Europe

2.7

4

1.8%

Asia Pacific

3.5

5

2.2%

Middle East

1.1

1.6

2.5%

Latin America

0.7

1

2.6%

The 6th region, Africa, is expected to struggle just above break-even.

Original press release here.

Disclosure: The author is long DAL.