Middle Eastern airlines forecast to post strong profits

25 March 2013

Aviation industry body predicts 2013 profits to beat previous year’s figures

Middle Eastern airlines are expected to post profits of $1.4bn this year, according to the latest forecasts from the International Air Transport Association (IATA).

The forecast beats previous estimates of $1.1bn and will also exceed the $900m profit recorded in 2012.

Last year, Abu Dhabi-based Etihad Airways reported net profits of $42m, a leap of 200 per cent on its 2011 results.

Other airlines with strong results include Dubai’s low-cost carrier FlyDubai, which posted net profits of AED151.9m ($41.1m) in 2012. Kuwait’s Jazeera Airways posted record profits of KD13.9m ($49.3m), an increase of 32 per cent on 2011.

Throughout 2013, airlines in the region will expand their capacity, in line with the region’s ambitions to become a global transit hub. IATA forecasts airlines to increase their capacity by 12.8 per cent this year, although demand will increase by 13.7 per cent.

In terms of operating profitability, the region’s airlines will only be beaten by carriers in Asia-Pacific and North America this year. North American airlines are forecast to post $3.6bn in profit in 2013, while Asian carriers are expected to post $4.2bn net profit this year.

Globally, the outlook for airline profitability is improving, according to IATA. The international aviation market is predicted to produce a combined net post-tax profit of $10.6bn this year.

The positive outlook is a result of “improved optimism for global economic prospects”, which is fuelling passenger demand and cargo volumes, according to Tony Tyler, IATA’s director general and cheif executive officer.

However, Tyler says the profit margin in the aviation industry remains narrow. “With a 1.6 per cent net profit margin, there is very little buffer between profit and loss,” he says.

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