- IATA Projects Global Industry Profit of $35.5bn in 2019
The International Air Transport Association (IATA) has projected that the global airline industry net profit will hit $35.5 billion in 2019, slightly above the $32.3 billion expected net profit in 2018.
This was revised down from $33.8 billion that was forecast in June last year.
The factors expected to drive the projection of the global body includes the return on invested capital, which was expected to be 8.6 per cent, unchanged from 2018; the margin on net post-tax profits expected to be four per cent, also unchanged from 3.9 per cent recorded in 2018.
Another factor was the overall industry revenues which was expected to reach $885 billion (+7.7% on $821 billion in 2018)
Passenger numbers was expected to reach 4.59 billion, up from 4.34 billion in 2018; cargo tonnes carried expected to reach 65.9 million, up from 63.7 million in 2018 and that there would be slower demand growth for both passenger traffic (+6.0% in 2019, +6.5% in 2018) and cargo (+3.7% in 2019, +4.1% in 2018) and there also be average net profit per departing passenger of $7.75 ($7.45 in 2018),” the global body said.
It noted that the lower oil prices and solid, albeit slower, economic growth (+3.1%), were extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.
It is expected that 2019 would be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.
“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” said IATA’s Director General and CEO, Alexandre de Juniac.
The global body said Passenger traffic (RPKs) was expected to grow by six per cent in 2019, which would outpace the forecast capacity (ASKs) increase of 5.8 per cent and remains above the 20-year trend growth rate.
This in turn would increase load factors and support a 1.4 per cent increase in yields (partially clawing back the 0.9% fall experienced in 2018).
Passenger revenues, excluding ancillaries, were expected to reach $606 billion (up from $564 billion in 2018).
Flour Mills of Nigeria Repays N51.64 Billion Series 2 Commercial Paper
Flour Mills of Nigeria Plc (FMN) has successfully repaid its N51.64 billion Series 2 Commercial Paper as revealed in a statement issued by the company.
This follows the earlier repayment of its N13.33 billion Series 1 Commercial Paper in August 2023.
Both the Series 1 and Series 2 Commercial Papers, totaling N64.97 billion, were initially issued on February 22, 2023, under FMN’s N200 billion Commercial Paper Programme.
The Series 1, with a yield of 13.0%, raised N13.3 billion, while the Series 2, with a yield of 14.0%, raised N51.64 billion.
FMN had launched its N200 billion Commercial Paper Programme on February 10, 2023, reflecting the company’s strategic financial planning.
The Group Chief Finance Officer, Mr. Anders Kristiansson, expressed satisfaction with the timely and successful repayment of the Series 2 Commercial Paper.
He emphasized FMN’s commitment to financial prudence and acknowledged the confidence placed in the organization by the investing public.
Kristiansson expressed gratitude to stakeholders for their continuous support, reiterating FMN’s dedication to delivering sustainable value and upholding the highest standards of corporate governance.
In addition to the successful repayment, FMN tapped into the market for its Series 3 Commercial Paper in June 2023, with subscriptions from banks and Pension Fund Administrators, contributing 39.7% and 40.8%, respectively.
The transaction was managed by FBNQuest Merchant Bank Limited as the Lead Arranger, with ChapelHill Denham Advisory Limited, FCMB Capital Limited, and United Capital PLC serving as Joint Arrangers.
African Airlines Projected to Cut Losses to $400m in 2024, Says IATA
The International Air Transport Association (IATA) has forecasted a reduction in losses for Nigerian and other African airlines from $500 million in 2023 to $400 million in 2024.
The Switzerland-based IATA made this projection while presenting the global airline industry outlook in Geneva, Switzerland, on Wednesday.
IATA’s Director-General, Willie Walsh, shared the outlook, stating that global airlines are expected to generate approximately $964 billion in revenue in the coming year.
The report indicated that airline industry net profits are anticipated to reach $25.7 billion in 2024, reflecting a slight improvement over the projected $23.3 billion net profit for 2023.
Despite the challenges faced by the aviation industry in recent years, IATA sees the $25.7 billion net profit in 2024 as a testament to aviation’s resilience.
Walsh acknowledged the impressive speed of recovery but emphasized that the net profit margin of 2.7% remains below industry expectations.
IATA estimates that around 4.7 billion people will travel in 2024, surpassing the pre-pandemic level of 4.5 billion recorded in 2019.
However, Walsh highlighted ongoing challenges, including regulatory burdens, fragmentation, high infrastructure costs, and a supply chain populated with uncertainties.
He emphasized the need for the industry to build a resilient future, given its significant contribution to global GDP and livelihoods.
Fuel prices are expected to average $113.8 per barrel in 2024, accounting for 31% of all operating costs, totaling $281 billion.
Walsh concluded by expressing optimism about more normal growth patterns for both passenger and cargo in the post-pandemic era.
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