Airline profit

Falling oil prices are going straight to airlines’ bottom lines, according to a new report from IATA, and U.S. airlines are leading the way.
Worldwide profit is projected to rise to $25.0 billion in 2015.

IATA credited lower oil prices and stronger GDP growth as the main drivers behind improved profits. Oil prices have fallen substantially in recent months, and this is expected to continue into 2015, with the full-year average price expected to be $85 per barrel. If that projection holds, it will be the first time that the average oil price has fallen below $100 per barrel since 2010, when oil averaged $79.40 per barrel.

Globally, fares should fall about 5%, but not in the U.S., where carriers continue to maintain capacity discipline and continue to benefit from industry consolidation. Outside the U.S. there is some excess capacity, said industry analyst Robert Mann.
He predicted that U.S. carriers will invest in infrastructure improvements rather than cut fares.
North American airlines will have the highest net profit in 2015 at $13.2 billion (up from $11.9 billion in 2014), IATA projected.

North American carriers’ net profit margin of about 6% of revenue is more than double that of carriers based in Asia Pacific, Europe, Latin America and the Middle East, IATA said.

 

Courtesy: TravelWeekly