The Strategist

IATA lowers forecast for airlines global profit by 21%

06/03/2019 - 10:56

The International Air Transport Association (IATA), which represents about 290 air carriers in the world, announced a lower forecast for airline profits amid falling demand and increased costs. Back in December 2018, the association predicted that the global air transport industry would make a profit of $ 35.5 billion by the end of 2019; now, however, IATA estimates this figure at $ 28 billion.

The international association cites a rise in fuel prices and a significant deterioration in the situation in world trade among the reasons for the decline in profits. “Weakening of global trade is likely to continue against the backdrop of the trade war between the United States and China,” said IATA Director General Alexandre de Juniac. “This primarily affects air cargo, but as tension are increasing, passenger traffic can also be affected.”

This year, airline costs are expected to grow by 7.4%, which will exceed 6.5% revenue growth. The projected cost of 2019 is $ 822 billion, total revenue is expected to reach $ 865 billion. At the same time, the total number of passengers transported by the airline this year is expected to grow to 4.6 billion. Last year, this figure was 4. 4 billion

According to Carsten Spohr, CEO of German airline Lufthansa, the European aviation market needs to be consolidated and local airlines are ready for this. Mr. Spohr said this on Sunday, June 2, in an interview with the American television channel CNBC. According to him, Lufthansa is also ready to engage in this process.