Middle East airlines are expected to post a $400 million profit this year (down 63.6 per cent from $1.1 billion in 2016) which is equal to $1.78/passenger.

According to an industry profitability outlook released by Iata, Passenger demand is expected to grow by 7.0 per cent, slightly ahead expected capacity growth of 6.9 per cent.’ Trading conditions for the Middle Eastern carriers have sharply declined over the last six months. Profitability and load factors are down significantly, as traffic and some business models have come under pressure. There is growing evidence that the ban on large electronic devices in the cabin and the uncertainty created around possible US travel bans is taking a toll on some key routes. Meanwhile the region is struggling with increased infrastructure taxes/charges and air traffic congestion. North American carriers are forecast to take the lead in 2017 in terms of profit, as they are expected to post a $15.4 billion net profit (down slightly from the $16.5 billion in 2016). Passenger demand is expected to grow by 4.0 per cent, slightly behind expected capacity growth of 4.4 per cent. In 2017 airlines are expected to retain a net profit of $7.69 per passenger. That is down from $9.13 in 2016 and $10.08 in 2015. The average net profit margin stands at 4.2 per cent (down from 4.9 per cent in 2016). Airlines are defining a new epoch in industry profitability. For a third year in a row we expect returns that are above the cost of capital. But, with earnings of $7.69 per passenger, there is not much buffer. That’s why airlines must remain vigilant against any cost increases, including from taxes, labor and infrastructure, said de Juniac. While overall industry performance is strong, major regional variations remain. About half the industry profits are being generated in North America ($15.4 billion). Carriers in Europe and Asia-Pacific will each add a $7.4 billion profit to the industry total. Latin America and Middle East carriers are expected to earn $800 million and $400 million respectively. Airlines in Africa are expected to post a $100 million loss.

Source: Civil Aviation Authority, Qatar