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Middle East airlines to post strong profits in 2013

Middle East: Wednesday, September 25 - 2013 @ 00:00

The International Air Transport Association (IATA) had previously predicted $1.5bn net earnings for regional carriers, but has since revised its 2013 industry outlook report.

Airports will continue to perform well in terms of long-haul delivery, and the industry trade group has claimed the Syrian crisis to have had a ‘limited’ impact. They also see passenger demand growing by 10.5 per cent – stronger than any one region – outstripped further by a capacity growth of 11.3 per cent.

Performance this year is a significant leap from 2012’s $7.4bn worldwide, and the growth trend is expected to last throughout 2014 at least, with airlines predicted to net $16.4bn. Middle East carriers are expected to post a $2.1 billion profit next year – their highest ever.

“Overall, the story is largely positive. Profitability continues on an improving trajectory. But we have run into a few speed bumps. Cargo growth has not materialized. Emerging markets have slowed. And the oil price spike has had a dampening effect. We do see a more optimistic end to the year. And 2014 is shaping up to see profit more than double compared to 2012,” said Tony Tyler, director general and CEO of IATA.

Performance in 2013 is considerably better than the $7.4 billion net profit of 2012. The upward trend should continue into 2014 when airlines are expected to return a net profit of $16.4 billion. If 2014 comes into line with predictions, it will be the strongest year ever, behind 2010 – with its record $19.2bn profits.

All regions should see improved profitability, despite a 54 per cent jump in jet fuel prices. The IATA reports that carriers have absorbed soaring overheads through changes in industry structure, in particular consolidations and joint ventures.

“We expect slightly more robust passenger growth (5.8 percent) and a significant improvement in cargo growth to 3.7 percent. Yields, however, for both passenger and cargo markets are expected to continue to fall by 0.5 percent and 2.1 percent respectively,” the IATA said in a statement.

“Airlines are demonstrating that they can be profitable in adverse business conditions,” said Tyler.

“Efficiencies are being generated through myriad actions – consolidation, joint ventures, operational improvements, new market development, product innovations and much more. When market forces drive action, we get results that both strengthen the industry and benefit the consumer. Quite simply, stronger airlines can invest more in improving connectivity and service innovations.”

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Wednesday, September 25- 2013 @ 0:00 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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