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As the CEOs of major U.S. airlines predicted, consolidation has done wonders for the bottom line.
By region, IATA forecasts the highest 2014 EBIT (earnings before interest and taxes) margin is in North America, at 6.4% (up 0.1ppts from its Dec-2013 forecast), compared with 5.2% in 2013.
Reported figures for North America in 2013 have turned out a little better than forecast and it is benefiting from what IATA calls “structural improvements” (ie consolidation).
The Middle East is forecast to be the second most profitable region, with an EBIT margin rising from 3.8% in 2013 to 4.2% in 2014. Although Latin America is forecast to be in third place by 2014 EBIT margin, IATA has lowered its margin forecast by 1.3 ppts to 3.8%.
Asia Pacific’s 2014 margin is forecast at 3.4%, which is 1.0 ppts below the previous forecast. Europe is still forecast to be the laggard among the major traffic regions, with a 2014 EBIT margin of 1.9% (down 0.1 ppts from the Dec-2013 forecast), reflecting its struggle to shrug off the effects of the eurozone crisis and structural problems in the European airline sector.
The only region, apart from North America, to see an increse in its 2014 EBIT margin forecast is Africa, although, at 0.8% (up 0.1 ppts), it is still expected to be the world’s least profitable region.
Source: CAPA – Centre for Aviation
This story originally appeared on CAPA – Centre for Aviation, a Skift content partner.
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