Transportation
Airlines to See Improved Profits From Lower Fuel Costs
Published:
Last Updated:
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive
compensation for actions taken through them.
The IATA forecasts fares down by 5.1% in 2015 and cargo rates down 5.8% due to more competition for customers. The $25 billion industry profit represents a margin of 3.2%. Per passenger net profit is expected to rise to $7.08, compared with $6.02 in 2014 and just $3.38 in 2013.
The IATA’s CEO said:
The industry story is largely positive, but there are a number of risks in today’s global environment — political unrest, conflicts, and some weak regional economies — among them. And a 3.2% net profit margin does not leave much room for a deterioration in the external environment before profits are hit.
The return on invested capital is forecast to rise to 7% in 2015, still slightly below the weighted average cost of capital, which the IATA forecasts at 7.8%.
The association bases its forecast on a per-barrel price of Brent crude oil at $85, the first time since 2010 that the average price will settle below $100.
In North America, profit per passenger is forecast at $15.54 and net profit margins are forecast at 6%. After-tax profits are expected to total $13.2 billion in 2015, more than half of the global total.
Net profits in the Asia-Pacific region are forecast at $5 billion, a net margin of just 2.2% and a per passenger profit of $4.30.
European carriers will continue to struggle. Net profit margin is forecast at just 1.8%, totaling $4 billion, compared with $2.7 billion in 2014. Per passenger profit is forecast at $4.27.
At the same time Wednesday morning, aircraft maker Airbus forecast a need for more than 5,300 new passenger jets and freighters in China alone between 2014 and 2033. That represents 17% of global demand for over 31,000 new planes in the 20-year period.
The short version is that airplane builders and the airlines appear to have a rosy outlook for the next few years.
ALSO READ: Boeing Issues Strong Forecast for New Aircraft Financing
The Average American Is Losing Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.