Airline Bosses Expect Soaring Revenues

Airlines the worldover are confident that their industry is capable of increasing revenue over the next twelve months and several deem joint ventures a more effective growth driver over mergers, according to a report.

Of all airline CEOs polled by PricewaterhouseCoopers (PwC), 82 per cent said they were confident that their industry's revenue will rise over the next year.

But CEOs are not counting on consolidation, with just three per cent saying they plan to use mergers as a key means to grow over the next twelve months.

While mergers were important for improving profit margins, regulatory hurdles could impede cross-border deals, PwC said in the report.

The survey also revealed that airline chief executives were more positive about the prospects for their industry than all CEOs as a group.

JVs

Joint ventures and alliances - business arrangements such as the collaboration between Britain's Virgin Atlantic Airways and US carrier Delta Air Lines - were identified by 18 per cent as their chief growth driver.

Seventy-one per cent of all airline CEOs polled said they were planning or pressing with changes to their company's data management. While 63 per cent said they were developing or mulling changes to their merger-and-acquisition or venture strategies.

The PwC report is based on an online survey of 39 CEOs of small and large carriers that are International Air Transport Association (IATA) members.

Jonathan Kletzel, US transportation and logistics leader at PwC, said the challenge for airline chiefs was in deciding how to spend their earnings.

"Do you re-invest in the airline itself, into employees, technology, into products and services or do you save it for a rainy day or give it back to investors?

"I think there's a lot of opportunity for the airlines to drive more innovation with some of those profits," said Kletzel, according to a report in Reuters.

Air Travel Boom

This year, airlines are expected to cash-in on the rising demand for air travel in emerging market economies, where expanding middle classes are increasingly turning to air travel.

The global industry is expected to make a net profit of $18bn (£10.50bn, €13.3bn) this year, up from an estimated $10.6bn in 2013, according to a June forecast by the IATA.

Global airlines will rake in revenues of $746bn in 2014, up from $710bn in 2013, the trade group has estimated.