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Point of Interest

Airlines to earn US$29.3b net profit in 2015

The International Air Transport Association (IATA) announced that the second edition of the World Financial Symposium (WFS) will focus on industry efforts to support sustained financial health.

The WFS will be held on September 14-17 in Barcelona, Spain against a backdrop of improving industry profitability. Airlines are expected to earn a net profit margin of four per cent, which will equate to a $29.3 billion net profit in 2015.

"After many years of hard work and restructuring, the airline industry on average is finally earning its cost of capital. This is a significant achievement, but it needs to be put into perspective. Firstly, we must recognise that for any other industry, earning the cost of capital is not an extraordinary achievement, rather it is the minimum performance expected," says Tony Tyler, IATA's director general and CEO.

He added that airlines would have to generate these "normal returns" regularly to attract the $5 trillion of capital to support the doubling of demand expected over the next two decades. And second, sustainable profitability needs to be widespread.

"Over half of the industry's profit this year is expected to be generated in North America. Some airlines are doing very well. But for many, keeping revenues ahead of costs is still a real struggle where success is anything but guaranteed," Tyler stated.

He underscored that the World Financial Symposium provides a forum for experts to analyse the challenges to attaining long-term financial stability so that aviation can continue to provide the connectivity that drives the global economy.

Symposium highlights will include a keynote address by Luis Gallego, CEO of Iberia, and the chief financial officer panel will be moderated by Michael Bell, partner - Aviation, Aerospace and Defence, Spencer Stuart, with participation from:

  • Ernique Dupuy, CFO, IAG
  • Alex Mbugua, CFO, Kenya Airways
  • Daniel Ho, CFO, Qatar Airways

Other topics to be discussed at WFS include: risk management, cyber security; improving airline credit ratings; the impact of the New Distribution Capability on revenue accounting; modernising the agency distribution network; taxation management; and the financial and operational aspects of mergers and acquisitions.

The popular CFO Summit also will return for a second edition; it is open to senior financial executives from airlines, business partners and key suppliers. 

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