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Driven by strong passenger growth and improved efficiency, airlines’ net profit will climb to $38.4 billion worldwide in 2018, IATA forecasted.
The forecast exceeds IATA’s expectation of $34.5 billion for 2017 net profit.
The strong 2018 forecast is fueled by IATA’s projection that the number of airline passengers will increase 6% next year to 4.3 billion, helping revenue jump 9.4%, to $824 billion.
IATA also expects costs to rise as jet fuel and labor expenditures go up. In fact, the organization expects airline unit costs to increase 4.3% in 2018 compared to unit revenue growth of 3.5%. As a result, operating margins will decline from 8.3% this year to 8.1%, according to the forecast.
North American airlines will make $16.4 billion in 2018, according to the IATA forecast, up from this year’s projected net profit of $15.6 billion and more than any other region in the world.
Passenger traffic in North America will rise 3.5%, IATA predicts.
European airlines will record a net profit of $11.5 billion next year, according to the forecast. Asia-Pacific carriers are projected to earn $9 billion, Latin American airlines $900 million, and Middle Eastern carriers $600 million. African airlines are projected to lose $100 million.