World Economy

Sustaining Aviation’s Financial Health

Sustaining Aviation’s Financial HealthSustaining Aviation’s Financial Health

The International Air Transport Association announced that the second edition of the World Financial Symposium will focus on industry efforts to support sustained financial health. WFS will be held September 14-17 in Barcelona, Spain against a backdrop of improving industry profitability. Airlines are expected to earn a net profit margin of 4% which will equate to a $29.3 billion net profit in 2015. “After many years of hard work and restructuring, the airline industry on an average is finally earning its cost of capital. This is a significant achievement but it needs to be put into perspective. “Firstly, we must recognize that for any other industry, earning the cost of capital is not an extraordinary achievement, rather it is the minimum performance expected. So airlines will have to generate these ‘normal returns’ regularly to attract the $5 trillion of capital to support the doubling of demand expected over the next two decades. And secondly, sustainable profitability needs to be widespread. Some airlines are doing very well. But for many, keeping revenues ahead of costs is still a real struggle where success is anything but guaranteed,” said Tony Tyler, IATA’s Director General and CEO.