IATA cuts forecast for airline profits as US-China trade war intensifies

The worsening US-China trade war and rising costs are putting pressure on airline earnings as the International Air Transport Association (IATA) cut its forecast for 2019 industry profits by more than a fifth.

Net income for 2019 will probably slump to $28 billion, compared with the $35.5 billion forecast in December, according to the industry trade group. That would also represent a decline of about 7% from 2018 as the trade war is expected to hurt cargo and even passenger traffic, said IATA, which represents about 290 airlines that make up more than 80% of air traffic.

“Margins are being squeezed by rising costs right across the board — including labor, fuel and infrastructure,” IATA Director General and Chief Executive Officer Alexandre de Juniac said in a statement on Sunday. “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.”