Global airline profits expected to soar by 11% in 2016

Iata believes airline profits will soar this year.

Iata believes airline profits will soar this year. - Credit: PA

Global airline profits are expected to rise by 11% this year, aviation trade body Iata has said.

It is forecasting profits of £27.3bn in 2016, compared with the £24.5bn generated last year.

This would make 2016 the fifth consecutive year of rising profits for the industry.

The outlook for this year has been revised upwards by £2.1bn from a figure given in December amid lower oil prices and passenger growth.

Tony Tyler, director-general of Iata, described the improvement in profitability as “a significant achievement” - but warned it is “just the minimum performance that investors expect” and there is the potential for even better results.

He told the organisation’s annual general meeting in Dublin: “On average, airlines will make 10.42 US dollars (£7.22) for each passenger carried. In Dublin, that’s enough to buy four double-espressos at Starbucks.

“Put another way, for every 100 US dollars (£69) in sales that Starbucks makes, their net profit is over 11 US dollars (£7.62) but airlines will only make 5.60 US dollars (£3.88).

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“We don’t begrudge Starbucks their profitability, but there is clearly still upside for airlines.”

Iata based its outlook for 2016 on the price of oil being an average of 17% lower than last year, while passenger demand is expected to grow by 6.2%.

Meanwhile Airports United - a trade union group representing airport workers - warned that low wages and poor working conditions would have consequences for passengers.

It issued a report which read: “Despite their strong financial performance, airlines have created a race to the bottom that is placing airport workers - and airport safety and service quality - under immense pressure.

“Airport workers now face a working environment marked by stress, irregular working patterns and wage levels that are often insufficient to meet their basic living costs.”