The International Air Transport Association (IATA) has revised its 2016 financial outlook for global air transport industry profits upwards to $39.4bn (from $36.3bn forecast in December 2015). Revenues are expected to total $709bn for an aggregate net profit margin of 5.6%, making 2016 the fifth consecutive year of improving aggregate industry profits. In 2015 airlines generated a global aggregate profit of $35.3bn.

The outlook is based on oil averaging $45/barrel (Brent) over the course of the year which is significantly lower than the $53.9 average price in 2015. GDP is expected to expand by 2.3% in 2016 — down from 2.4% in 2015 and the weakest growth since 2008 when the global financial crisis hit.

Passenger demand is robust, with 6.2% growth expected in 2016 — down from 7.4% in 2015. Capacity is expected to grow slightly ahead of demand at 6.8%. Load factors are expected to remain high (80.0%), but with a slight slip from 2015 (80.4%). Yields are expected to fall by 7.0%. Unit costs, driven by lower fuel prices, are expected to fall by 7.7%. Overall the passenger business is projected to generate $511bn in revenues, down from $518bn in 2015.

The cargo side of the business remains in the doldrums with 2.1% growth in demand.

Looking at the individual regions:

• North American carriers continue to deliver the industry’s strongest financial performance with an expected net profit of $22.9bn, versus $21.5bn in 2015. Passenger capacity is expected to expand by 4.3% in 2016, marginally outpacing an anticipated 4.0% increase in demand.
• European airlines are expected to post a $7.5bn profit in 2016 (up from $7.4bn in 2015). Passenger capacity is forecast to grow by 5.8%, ahead of expected demand growth of 4.9%.
• Airlines in Asia-Pacific are expected to post a $7.8bn profit in 2016, up from $7.2bn in 2015. Capacity is forecast to expand by 9.1% in 2016, ahead of demand which is likely to grow by 8.5%.
• Middle East carriers are expected to post a $1.6bn profit, up slightly on the $1.4bn reported for 2015. Capacity is forecast to grow at 12.2%, outpacing an expected 11.2% expansion of demand.
• Airlines in Latin America are expected to see a $100m profit in 2016 after a $1.5bn loss in 2015. Demand is expected to grow by 4.2% while carriers are forecast to add 3.7% to capacity.
• African airlines are expected to post a $500m loss in 2016, a slight improvement on the $700m that the region’s carriers lost in 2015. Capacity growth (+5.3%) is anticipated to outpace demand growth of 4.5%.