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  HOME | Business & Economy (Click here for more)

Airline Trade Association Sees Industry Profit Up to $35.5 Billion in 2019

LONDON – The global airline industry is expected to post $35.5 billion in combined net profits next year, the International Air Transport Association said on Wednesday, extending to 10 years a period during which the often-volatile air-travel sector has remained in the black.

IATA, with more than 200 airline members, said rising US oil output and large inventories should keep a lid on prices and combine with still healthy economic growth to underpin the rise in profit from $32.3 billion the industry is expected to deliver this year. The figure is $1.5 billion below a previous forecast.

There are clear signs airlines have been able to translate strong demand coupled with relatively disciplined growth in seats for sales into higher air fares. Passenger yield should rise 1.4 percent next year, IATA said. Average net profit per departing passenger is expected to be $7.75 compared with $7.45 this year.

“We are cautiously optimistic that the run of solid value creation for investors will continue for at least another year,” IATA Director General Alexandre de Juniac said.

Carriers in North America should remain the most profitable, delivering a projected $14.7 billion of industry net income this year and $16.5 billion in 2019, IATA said. Only African airlines are expected to post a collective loss.

Airline growth is expected to be strong next year, even if slightly less buoyant than in 2018. Around 4.6 billion passengers should take flight in 2019. Passenger traffic, IATA said, should advance more than 6 percent next year, down from more than 6.5 percent growth in 2019.

Cargo volumes should increase to 65.9 million metric tons flown from 63.7 million tons this year, signaling still limited impact from global trade tensions.

Fuel should represent around 24.2 percent of average airline operating costs. Nonfuel costs also are on the rise, with labor cost inflation becoming an increasing concern for airlines. IATA sees labor costs rising 2.1 percent next year. IATA Chief Economist Brian Pearce said it will likely take a recession to stem cost pressures.

 

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