The global airlines’ industry is projected to report a net profit of USD 35.5 billion in 2019, remaining profitable for the tenth straight year, helped by lower oil prices and solid economic growth, IATA said Wednesday.
The grouping of around 290 airlines worldwide also said that the passenger numbers are expected to rise to 4.59 billion next year from 4.34 billion in 2018.
Releasing its latest Global Economic Outlook report, the International Air Transport Association (IATA) noted that the net profit of the airline industry is projected to touch USD 35.5 billion next year, higher than USD 32.3 billion expected for 2018.
The 2018 projection has been revised downwards from USD 33.8 billion forecast in June.
In 2019, the average net profit per departing passenger is projected to be USD 7.75 compared to USD 7.45 for this year.
“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. So, we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year,” IATA Director General and CEO Alexandre de Juniac said.
He also noted that there are downside risks as the economic and political environments remain volatile.
In terms of net post-tax profits, the IATA said USD 35.5 billion next year would be the tenth consecutive year of profit, which is the “longest run of profits in the industry’s history”.
Airlines have been in the black since 2010 and since 2015 they have been generating returns in excess of costs of capital, de Juniac said.
According to the IATA, Asia-Pacific carriers are expected to report a higher net profit of USD 10.4 billion in 2019 compared to USD 9.6 billion projected for this year.
“This is a region (Asia-Pacific) of diverse markets, some of which are seeing strong growth from new LCC (Low Cost Carrier) entrants while others are very dependent on outbound cargo from key manufacturing centres,” it added.
As per the IATA, jet fuel prices are expected to average USD 81.3 per barrel in 2019. The full impact of the decline would be delayed due to heavy levels of hedging in some regions and “fuel is expected to account for 24.2 per cent of the average airline’s operating costs (an increase from 23.5 per cent forecast for 2018),” the grouping said.
de Juniac said aviation sector supports nearly “66 million jobs and underpinning 3.6 per cent of global GDP with an economic impact of USD 2.7 trillion annually”.
Noting that the buffer between profit and loss is thin, he said a dollar for a new tax, an increase in charges or shift in oil price can eat away at the USD 7.75 per passenger profit very quickly.
Airlines are hiring and the workforce is expected to grow 2.2 per cent to 2.9 million employees in 2019.
