Airline industry to enjoy tenth year of profits in 2019 - IATA
By Abigail Townsend
Date: Wednesday 12 Dec 2018
(Sharecast News) - The airline industry will see profits take off for the tenth year in a row in 2019, according to the International Air Transport Association, as oil prices soften and the global economy expands.
IATA is forecasting a net profit for the airline industry of $35.5bn in 2019, slightly ahead of the $32.3bn profit predicted for 2018, with revenues reaching $885bn against 2018's $821bn.
Passenger numbers are expected to reach 4.59bn, up from 4.34 this year, with cargo tonnes carried forecast to increase from 63.7m to 65.9m.
The Geneva-based trade body said: "Lower oil prices and solid, albeit slower, economic growth [of] 3.1% are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018. It is expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry's cost of capital."
However, IATA has also predicted slower demand growth for passenger traffic - up 6% in 2019 against 6.5% in 2018 - and for cargo, which it believes will increase by 3.7% in 2019 compared to a 4.1% rise in the current year.
Alexandre de Juniac, IATA's director general and chief executive, said: "We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of a solid value creation for investors will continue for at least another year.
"But there are downside risks, as the economic and political environments remain volatile."
Oil prices surged in 2018 to highs of around $86 a barrel. However, in recent months they have fallen back on expectations Opec will cut production. To date the oil cartel has failed to reach agreement on the proposed reduction, but the price of crude has continued to fall and is now trading around $60.
The International Monetary Fund has predicated the world economy will continue to grow in 2019, but risks such as the ongoing trade war between China and the US remain.
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