Aviation body forecasts $35.5b net profit
Low oil prices and solid GDP growth expected to increase profitability for airlines, Iata says
Airlines around the world will see net profits rebound as strong demand, coupled with low oil prices, will dampen rising costs that hit 2018 profits, according to the International Air Transport Association (Iata). The industry body has forecast a net profit of $35.5 billion (Dh130.56 billion) for the global airline industry in 2019, slightly ahead of the $32.3 billion expected net profit in 2018. This figure was revised down from $33.8 billion earlier this year.
Iata estimates that overall industry revenues are expected to reach $885 billion in 2019, up by 7.7 per cent on 2018. Passenger numbers are expected to reach 4.59 billion, up from 4.34 billion in 2018. Meanwhile, cargo carried is set to reach 65.9 million tonnes, according to IATA.
However, demand growth for ■ passenger traffic will slow from 6.5 per cent in 2018 to 6 per cent in 2019, the group said. Cargo traffic demand is also set to drop from a growth trajectory of 4.1 per cent in 2018 to 3.7 per cent in 2019.
Lower oil prices and strong but slowing economic growth, IATA say, are extending the run of profits for the global airline industry. “We had expected that rising costs would weaken profitability in 2019,” said Alexandre de Juniac, Iata’s director general and chief executive, “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. But there are downside risks as the economic and political environments remain volatile,” De Juniac added.
The next year is expected to be the 10th year of profit and the fifth consecutive wherein airlines will deliver a return on capital, according to Iata.