The International Air Transport Association (IATA) expects that airlines in the Middle East will enjoy a $1.3 billion rise in profits in 2018, or $5.89 per passenger—a boost that will be driven by a number of factors.
“The rise of oil prices is helping revenues and the oil-based economies in the region, aero-political relations with the U.S. have improved, while the Gulf airlines have substantially curbed growth,” the industry trade group said in a statement this week revealing its global profit targets.
In 2017 airlines in the Middle East saw a $1 billion rise in profits, or $4.81 per passenger.
Globally, IATA expects airlines to achieve a collective net profit of $33.8 billion (4.1% net margin) in 2018. That growth should occur despite rising costs on fuel and labor, helped by an upturn in the interest rate cycle, says IATA. Airlines earned a record $38 billion globally last year, but comparisons to that figure are distorted by special accounting items such as one-off tax credits, which boosted 2017 profits.
“Solid profitability is holding up in 2018, despite rising costs. The industry’s financial foundations are strong with a nine-year run in the black that began in 2010,” said Alexandre de Juniac, IATA’s director general and CEO. “The return on invested capital will exceed the cost of capital for a fourth consecutive year. At long last, normal profits are becoming normal for airlines. This enables airlines to fund growth, expand employment, strengthen balance sheets and reward our investors.”
Emirates Group last month announced that its revenues rose by 67% for the financial year ended March 31, netted around $27.2 billion. The group’s profits touched $1.1 billion, up 8% over last year’s results.