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Europe’s airline profits lag behind America’s

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Airlines fly towards record $33 billion in profits, says IATA
The aviation industry is likely to post a second consecutive year of profits in 2015, almost doubling them to $33 billion (€30.1 billion), thanks mostly to low fuel prices. But there are big regional differences, with Europe lagging behind North America, a new report by the International Air Transport Association says.
European airlines are expected to deliver performance improvements with net profits increasing from $6.9 billion in 2015 to $8.5 billion in 2016.
Lower fuel costs are benefitting the region, though hedging rates of 80-90% for the majority of large airlines have delayed much of the benefit from low fuel prices into 2016.
Other positive factors include a faster than expected recovery of the European economy and strong performance on business travel on North Atlantic routes, IATA says.
Yet “performance is very patchy with intense and increasing competition on intra-European markets reducing the financial performance of some of those exposed to these markets,” the association writes.
“On a per passenger basis, profits are $8.80, which places their performance significantly behind that of North American carriers. Capacity growth is expected to accelerate from 3.9% in 2015 to 6.2% in 2016 with Turkey being a major driver.”
Carriers in North America are leading the industry’s performance and are expected to generate considerably more than half the industry’s total profits in both 2015 ($19.4 billion) and 2016 ($19.2 billion). On a per passenger basis, profits of $21.44 in 2016 also places their performance at the top of the industry.
This is as a result of a strong US economy, the appreciating US dollar, lower oil prices and a restructured industry. Capacity growth by North American airlines is expected to accelerate from 3.7% in 2015 to 4.8% in 2016 on the strength of the US economy.
TTG Nordic

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