Bright outlook for global airline profits

Airline executives forecast a bright outlook for freight and passenger numbers. Photo / Grant Bradley

Airlines are forecasting passenger growth this year at rates not seen for more than a decade.

A survey of chief financial officers and heads of cargo by the International Air Transport Association (IATA) found they are more optimistic about profitability this year than they were at the same time in 2017.

''This positive outlook is being supported by robust demand growth on both the passenger and freight sides of the business,'' the association said.

Just over 86 per cent of respondents expect passenger volumes to rise over the year ahead.

The majority of executives - 56 per cent - expect profitability to improve during the next 12 months and this comes on top of a strong finish to 2017 for industry financial performance.

Just on 38 per cent of respondents reported an increase in costs in the fourth quarter of last year compared to the same period a year ago, with many singling out the impact of higher fuel prices. Oil prices are up 50 per cent from their most recent low point in 2017.

The upward trend in oil prices was expected to continue to boost airline costs in the year ahead, IATA said.

Association global airfreight data for 2017 showed that demand, measured in freight tonne kilometres, grew by 9.0 per cent, more than double the 3.6 per cent recorded the previous year.

Full-year demand for air freight in 2017 grew at twice the pace of the expansion in world trade, which was 4.3 per cent.

The outperformance was a result of strong global demand for manufacturing exports as companies moved to restock inventories quickly.

"Air cargo had its strongest performance since the rebound from the global financial crisis in 2010. Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time," said Alexandre de Juniac, the association's director general and chief executive.

He said the outlook for air freight was positive.

Consumer confidence was buoyant and freight demand was expected to grow by 4.5 per cent. There was growing strength in international e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals.