Airlines will make less profit in 2016 than previously expected and profits will fall in 2017 with oil prices rising and demand slowing, the International Air Transport Association said on Thursday.
Iata, representing some 265 airlines accounting for 83 per cent of global air traffic, is now forecasting they will make a collective net profit of US$35.6 billion this year, against a previous forecast for $39.4bn.
For 2017, it expects profit will fall to $29.8bn, breaking a streak of five years of profit growth.
However, at a predicted 7.9 per cent, the industry’s return on capital is also expected to exceed the cost of capital in 2017 for the third year in a row, a boost for investors in the sector.
“The airlines are in a better shape to remain profitable while facing these challenges,” Iata director general Alexandre de Juniac told journalists.
* Reuters
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