IATA cautiously optimistic about airline performance

KUALA LUMPUR: The International Air Transport Association (IATA) has forecast the global airline industry to generate a net profit of US$35.5bil in 2019, slightly above the US$32.3bil net profit expected this year.

IATA director general and chief executive officer Alexandre de Juniac said the forecast was due to lower oil price coupled with solid, albeit slower economic growth (+3.1%) which would extend the run of profits for the global airline industry.

“This is after profitability was squeezed by rising costs in 2018. It is expected that 2019 will be the 10th year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors,” he said in a statement.

“Rising costs would weaken profitability in 2019 but the sharp fall in oil prices and solid gross domestic product growth projections have provided a buffer.

“So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year,” he added.

On the industry outlook for 2019, de Juniac said it was based on an anticipated average Brent crude oil price of US$65 per barrel, which is lower than the US$73 per barrel in 2018, and this would be a relief for airlines.

“Jet fuel prices are expected to average at US$81.30 per barrel in 2019, lower than the US$87.60 per barrel in average in 2018. The full impact of this decline will be delayed due to heavy levels of hedging in some regions,” he said. — Bernama