Solid Profits Despite Rising Costs

IATA announced its expectation for airlines to achieve a collective net profit of $33.8 billion (4.1% net margin) in 2018. This is a solid performance despite rising costs, primarily fuel and labor, but also the upturn in the interest rate cycle. These rising costs are the main driver behind the downward revision from the previous forecast of $38.4 billion in December 2017.

In 2018, the return on invested capital is expected to be 8.5% (down from 9% in 2017). This still exceeds the average cost of capital, which has risen to 7.7% on higher bond yields (7.1% in 2017). This is critical for attracting the substantial capital needed by the industry to expand its fleet and services.

Collected and summarized from the source below by GiangTan