Global airlines may post 2014 profit at US$18.7b
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THE global airline industry still expects a record profit for 2014, just not quite as high as previously forecast due to the impact of rising jet fuel prices, officials said yesterday.
But the cost of fuel isn’t the only challenge. Venezuela’s decision to block airlines from taking profits out of the country, the Ukrainian political crisis and a vanished Malaysian jetliner are adding uncertainty to the outlook, said Tony Tyler, director-general and CEO of the International Air Transport Association.
The Geneva-based group, which represents 240 airlines, or 84 percent of total air traffic, said the profit this year is set to be US$18.7 billion, a downgrade from the US$19.7 billion it forecast in December, as fuel prices have been higher than expected since then. Oil prices may now average US$108 per barrel, US$3.50 per barrel above previous projections.
That profit figure is still well above the US$12.9 billion earned in 2013 and the US$6.1 billion in 2012. It’s also higher than the previous record profit of US$17.3 billion made in 2010.
This year, the upward revision to oil prices may add US$3 billion to the industry’s jet fuel bill, only partially offset by an extra US$2 billion in revenue expected from stronger demand in passenger and cargo traffic.
Revenues in 2014 are forecast to total US$745 billion, while the profit margin is expected to remain thin, at just US$5.65 per departing passenger this year. That would be up from US$4.13 per passenger in 2013, but still below the US$6.45 notched in 2010.
The other issues facing the industry this year, Tyler said, include the Venezuelan government’s decision to keep foreign airlines from taking US$3.7 billion in earnings out of the country as well as Ukraine’s instability pushing up oil prices and the disappearance of Malaysia Airlines flight MH370 over Southeast Asia.
Tyler said he raised his concerns over the Venezuelan government’s actions in a letter to the country’s President Nicolas Maduro.
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