ME Carriers To Net $1.6bn Profits In 2013

Middle East carriers are expected to post profits of $1.6 billion, overshooting the projected target of $1.5 billion, according to the International Air Transport Association’s (IATA) industry outlook for 2013.

The report attributed the airlines’ revenue growth to the region’s efficient hubs that support strong performance in long haul markets. Despite the unrest in Syria affecting airlines’ profits globally, the Middle East’s carriers have not been overly impacted by it, the report said.

IATA also said that passenger demand is expected to grow by 10.5 per cent in the Middle East – the strongest among all the regions. However this figure will be slightly outstripped by capacity growth of 11.3 per cent.

The report also projects that Middle East carriers will post their highest profits in 2014 as they touch $2.1 billion.

Globally, IATA said that airlines’ second quarter profit is growing, but at a slower pace than expected. They are expected to post a net profit of $11.7 billion in 2013, falling slightly short of the projected $12.7 billion.

“This reflects the impact on demand of the oil price spike associated with the Syrian crisis and disappointing growth in several key emerging markets,” IATA said in a statement.

The association estimates that the current upward trend will continue well into 2014 when airlines are estimated to turn in a profit of $16.4 billion. This would make 2014 the second strongest year after 2010 when profits soared to $19.2 billion.

Tony Tyler, IATA’s director general and CEO, said that airlines are continually demonstrating that they can withstand tough business conditions.

“Efficiencies are being generated through myriad actions—consolidation, joint ventures, operational improvements, new market development, product innovations and much more,” Tyler said.

“When market forces drive action, we get results that both strengthen the industry and benefit the consumer.”

He said that the balance between the profits and loss remains delicate despite the improved forecast for 2014.

“A $16.4 billion profit for transporting some 3.3 billion passengers means that airlines will retain an average of about $5 per passenger. That very simple calculation demonstrates that even a small change in the operating environment—a new tax or other cost increase for example—could change the outlook quite significantly,” he said.