Mideast carriers to benefit from cheaper fuel
Lower oil prices are expected to boost profits at Middle East airlines in 2019 as a decade of double- digit capacity growth starts to slow.
The 2019 industry outlook from the International Air Transport Association ( IATA) is based on an anticipated average oil price of $65 per barrel — lower
Most modern commercial planes have more than 10 percent in US parts, the threshold for needing US Treasury approval.
But Russian officials have been reported as saying Sukhoi is working on reducing the number of US parts in the hopes of winning an Iranian order for up to 100 aircraft.
“If the Iranian airlines want to use this aircraft (Superjet 100 ) and the seller is willing to sell it to Iran, the Civil Aviation Organization is ready to issue its final comment on this aircraft,” the semi-official Fars news agency quoted Ali Abedzadeh, head of the Civil Aviation Organization, as saying. than the $73 experienced in 2018.
Middle East airlines are expected to report an $800 million net profit in 2019, compared to $600 million in 2018, IATA said on Wednesday.
“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,” said IATA CEO Alexandre de Juniac. “So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year.”
Lower oil prices are welcome relief for airlines whose aviation fuel bill can account for a third of overall costs.
IATA said that jet fuel prices are expected to average $81.30 per barrel in 2019, lower than the $87.60 per barrel average for 2018.
Middle East carriers have been hurt by a slowdown in regional spending, conflict and overcapacity.