Airlines to extend record profits, gain 10% next year

Climbing up North American carriers are leading gains and will account for more than half of total income in both 2015 and 2016

Airline earnings are set to advance 10 percent to a record $36.3 billion in 2016, aided by cheap fuel and an expanding US economy, the International Air Transport Association said after boosting its estimate for the current year by $3.7 billion.

Net income across the industry should reach $33 billion in 2015, up from a June estimate for $29.3 billion that would already have been a new high, IATA said at a briefing Thursday. That's almost double 2014's $17.4 billion. North American carriers are leading gains and will account for more than half of total income in both 2015 and 2016, IATA said. Next year's profit margin will be about 5.1 per cent, and the industry's return on capital will exceed borrowing costs for the first time ever over both years, it said.

"We are finally -- after years of destroying capital -- delivering a minimal level of profitability that an an investor would expect," IATA Chief Executive Officer Tony Tyler said in Geneva. "This is a good news story. The airline industry is delivering solid financial and operational performance, and passengers are benefiting from greater value than ever."

Tyler cautioned that gains may slow, with most airlines having realized the maximum benefit of low oil by next year, interest rates likely to rise and the industry typically undergoing an eight to nine year profitability cycle.