SAN FRANCISCO, June 02, (THEWILL) – The outgoing Director-General/CEO of the International Air Transport Association (IATA), Tony Tyler, has assured airlines that they would soon return to profitability despite generally adverse economic conditions.
Tyler made the declaration as he presented his report on the air transport industry, at the ongoing 72nd IATA annual general meeting in Dublin, Ireland, as he announced that airlines generated a global aggregate profit of $35.3 billion (re-stated from $33bn estimated in December 2015).
He declared that airlines had struggled to turn to profit and reward investors, saying, “That is beginning to change.”
“It will be only the second year in our history – and the second in a row – in which airlines will make an aggregate return in excess of the cost of capital. After decades of capital destruction, that’s a significant achievement. But it is still just the minimum performance that investors expect,” he said.
“Put another way, for every $100 in sales that Starbucks makes, their net profit is over $11. But airlines will only make $5.60. We don’t begrudge Starbucks their profitability. But there is clearly still upside for airlines.
“On average, airlines will make $10.42 for each passenger carried. In Dublin, that’s enough to buy four double-espressos at Starbucks.”
On global economy, he said weak economic conditions prevail, with Gross Domestic Product expected to expand by 2.3 percent in 2016. That is down from 2.4 percent in 2015, and the weakest growth since 2008 when the global financial crisis hit.
Story by David Oputah
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