Remarks of Tony Tyler at the IATA World Passenger Symposium, Hamburg

29.08.2023 - 08:56 / traveldailynews.com / Theodore Koumelis

For the first time, the industry on average will be creating value for its equity investors. Now, for any other industry, earning the cost of capital is the absolute minimum performance expected. So we should not feel the need to apologize for achieving a 4% net profit margin. I suspect future investors will demand more than that after so many years of the destruction of shareholder value!

Ladies and gentlemen: good morning. It’s a pleasure to be with you in this city that has so much history and which has more recently become a global center of aircraft design and manufacturing, employing some 40,000 highly-skilled individuals. I would like to add my thanks to our sponsors for their strong support, which makes events such as these possible.

2015 is a special year for the airline industry. Seventy years ago, the leaders of 57 airlines came together in Havana Cuba to form IATA. The goals of the Association were clear. IATA was to promote safe, efficient, and economical air transport. In doing so, it would create great value-benefitting the peoples of the world and fostering commerce. We would also be a vehicle to support the development of the standards and best practices necessary for the safe and efficient operation of the global air transport network.

The tag line for our 70th anniversary celebration is “Flying better. Together.” This reminds us that IATA was created to be a forum for industry collaboration and partnership. And we are flying better in 2015. Our milestone year is, by historical measures, a very good one for aviation. Demand for connectivity is strong and fuel prices have fallen significantly—although less so for airlines whose home currencies have lost value against the US dollar. Still, after many years of hard work and restructuring, the industry is on a path toward financial sustainability. For 2015, we expect an industry net profit of $29.3 billion on revenues of $727 billion, for a net profit margin of 4%, generating a return on capital of 7.5%.

For the first time, the industry on average will be creating value for its equity investors. Now, for any other industry, earning the cost of capital is the absolute minimum performance expected. So we should not feel the need to apologize for achieving a 4% net profit margin. I suspect future investors will demand more than that after so many years of the destruction of shareholder value!

They will do that as the demand for connectivity continues to grow. This year airlines will carry 3.5 billion passengers and that figure is expected to more than double in 20 years. The task before us is how to work together to accommodate that growth, while upholding customers’ expectations for their air travel experience.

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