Airlines project higher profits for 2016 but still get outdone by Starbucks
The world’s airlines have revised their 2016 profit forecast up by nearly 9%, but the industry still pales in comparison to a financial powerhouse such as coffee peddler Starbucks.
That was the message from the International Air Transport Assn., the trade group that revised its annual profit forecast this week to $39.4 billion, up from the forecast in December of $36.3 billion. That equates to a 5.6% profit margin on revenue of $709 billion.
The trade group attributed the higher profit forecast to lower fuel costs, a strong revenue stream from passenger fees, improved efficiency and record rates of filled seats. The strongest financial performance is expected from North American carriers, which are forecast to generate $22.9 billion of this year’s profit.
“The result: Consumers are getting a great deal and investors are finally beginning to see the rewards they deserve,†said Tony Tyler, director-general and chief executive of the IATA.
But in his profit forecast, Tyler bemoaned that the industry’s profit margin still falls short of some other industries.
For every $100 in sales, Starbucks earns about $11, he said, while the airline industry only earns $5.60.
“We don’t begrudge Starbucks their profitability,†Tyler said. “But there is clearly still upside for airline profits.â€
ALSO
Red Roof lets you know which hotels have the fastest WiFi
Celebrity cybersecurity consultants protect stars from hackers
TSA is tired of the wait too and wants new technology to speed up airport screenings
For more travel news, follow Hugo Martin on Twitter: @hugomartin
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.
