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Sat 15 Dec 2018 11:02 AM

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MidEast airlines forecast to see $800m net profit in 2019

IATA says expected net profit per air passenger in the Middle East will be $3.33 next year

MidEast airlines forecast to see $800m net profit in 2019
Globally, IATA forecasts net profit to be $35.5 billion in 2019, slightly ahead of the $32.3 billion expected net profit in 2018. (FABRICE COFFRINI/AFP/Getty Images)

Middle Eastern carriers are expected to report an $800 million net profit in 2019, up from a weaker $600 million in 2018.

The expected net profit per passenger is $3.33, according to new figures from the International Air Transport Association (IATA).

It said the region has been challenged by the earlier impact of low oil revenues, conflict, competition from other ‘super-connectors’ and setbacks to particular business models, a reference to Etihad Airways' sweeping reorganisation.

It said the challenges have led to a sharp slowdown in capacity growth - after more than a decade of double-digit growth, passenger capacity growth was halved to 6.7 percent in 2017.

The region reported 4.7 percent capacity growth in 2018 and is expected to slow to 4.1 percent in 2019, which together with restructuring is helping to generate a recovery.

Globally, IATA forecasts net profit to be $35.5 billion in 2019, slightly ahead of the $32.3 billion expected net profit in 2018.

Overall industry revenues are expected to reach $885 billion, up 7.7 percent while passenger numbers are expected to reach 4.59 billion, up from 4.34 billion in 2018 and cargo tonnes carried are expected to reach 65.9 million, up from 63.7 million in 2018.

Lower oil prices and solid, albeit slower, economic growth  are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018, IATA added.

It is expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.

“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” said Alexandre de Juniac, IATA’s director general and CEO.

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