Airline demand slows

IATA announced at its Soul AGM a downgrade of its 2019 outlook for the global air transport industry to a $28bn profit (from $35.5bn forecast in December 2018). That is also a decline on 2018 net post-tax profits which IATA estimates at $30bn.

The airline trade organisation noted that the business environment for airlines is deteriorating with rising fuel prices and a substantial weakening of world trade. In 2019 overall costs are expected to grow by 7.4%, outpacing a 6.5% rise in revenues. As a result, net margins are expected to be squeezed to 3.2% (from 3.7% in 2018). Profit per passenger will similarly decline to $6.12 (from $6.85 in 2018).
 
“This year will be the tenth consecutive year in the black for the airline industry. But margins are being squeezed by rising costs right across the board – including labour, fuel, and infrastructure. Stiff competition among airlines keeps yields from rising. Weakening of global trade is likely to continue as the US – China trade war intensifies. This primarily impacts the cargo business, but passenger traffic could also be impacted as tensions rise. Airlines will still turn a profit this year, but there is no easy money to be made,” said Alexandre de Juniac, IATA’s director general and CEO.

www.iata.org/pressroom/pr/pages/2018-12-12-01.aspx

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