Airline Industry Expect to Take Financial Hit

IATA (International Air Transport Association) has announced that it is expecting industry net profits to be down from it’s original projections by around a fifth.

In December last year, IATA announced that it’s projections for 2019 would be $35.5 billion for the calendar year however they have no revised this number to $28 billion. Whilst the original projections would have seen around $5 billion in growth these revised figures mean that the industry is expecting reduction in profits of $2 billion year over year.

According to IATA, “The business environment for airlines has deteriorated with rising fuel prices and a substantial weakening in world trade.”

As part of their announcement IATA stated that it has seen costs rise by 7.4% this year whereas there has only been a 6.5% increase in revenues. Fuel makes up a large part of these costs and it is now expected for crude oil to average around $70 a barrel whereas previous estimates had that around $65.

In total revenue terms expectations have been trimmed by $20 billion from $885 billion to $865 billion which means that whilst the projections are down year over year the industry is still looking at a 6.5% increase in turnover.

Look at the different regions of the world, Asia-Pacific airlines are expected to make $6 billion profit, North American Airlines $15 billion, and European airlines set to make around $700 million. It is expected that there will be a slight growth in South America, his is in contrast to African and the Middle East which aren’t expected to turn an overall profit in 2019.

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