Global Airline Group Cuts 2019 Profit Forecast

A rebound in 2020 requires a reduction in trade tensions, the IATA said.
Lauren MuskettDecember 11, 2019

The International Air Transport Association (IATA) said it was cutting its full-year net profit forecast by 5.1% from last year, citing slower growth, Brexit, and social unrest that created a “tougher than anticipated” business environment. 

“Trade wars produce no winners,” IATA director General Alexandre de Juniac said. 

The IATA also cut its global revenue forecast for the full year to $838 billion from the $899 billion it predicated in June. The group forecast trade growth of 3.3% in 2020 on the expectation that election-year pressure would contribute to reduced trade tension, but it said an improvement next year would depend on a “truce” in global trade disputes. 

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“We’ve downgraded our forecasts for 2019 pretty much across the board,” chief economist Brian Pearce said. “This has been driven mostly by the impact of trade wars.”

Net profit per passenger fell to $5.70 this year from $6.22. Freight demand fell 3.3%, the sharpest drop since 2009 during the global financial crisis. Year-on-year revenue from freight was down 8%. 

The industry has seen the fastest growth in airline bankruptcies in history, according to the airline consulting group IBA, with most of the failures coming in Europe. 

“There’s clearly scope for more consolidation though, given that long tail of airlines that haven’t improved,” Pearce. 

Airlines also face uncertainty around climate as activists call for an end to the industry’s fuel-tax exemption. 

At a sustainable innovation forum in Madrid on Tuesday, de Juniac said taxes on carbon emissions would be inefficient and called on oil companies to make investment in sustainable aviation fuels. 

“We want to be part of Europe’s building of a new energy economy and we will do everything we can to make sustainable aviation fuels a priority for aviation in Europe and around the world,’’ de Juniac said.

More than 190 countries have agreed to ensure any increase in international aviation emissions above 2020 levels would be offset under the CORSIA plan, though those levels do not account for non-CO2 emissions including nitrogen oxides and soot. 

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