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IATA predicts $36bn airline profits in 2019
Vietnam Airlines Boeing 787. © Boeing

IATA predicts $36bn airline profits in 2019

The International Air Transport Association (IATA) is forecasting a 10% jump in global airline industry net profit in 2019.

The International Air Transport Association (IATA) is forecasting a global airline industry net profit of $35.5bn in 2019, an increase of almost 10% on the revised $32.3bn net profit expected in 2018. Overall industry revenues are expected to reach $885bn (+7.7%).

According to IATA, lower oil prices and solid, albeit slower, economic growth (+3.1%) are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.

It is expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital (8.6%) that exceeds the industry’s cost of capital, creating value for its investors.

The 2019 industry outlook is based on an anticipated average oil price of $65/barrel (Brent) which is lower than the $73/barrel (Brent) experienced in 2018, following the increase in U.S. oil output and rising oil inventories. Jet fuel prices are expected to average $81.3/barrel in 2019, lower than the $87.6/barrel average for 2018. Fuel is expected to account for 24.2% of the average airline’s operating costs (vs. 23.5% forecast for 2018).

Passenger traffic (RPKs) is expected to grow 6% in 2019, which will outpace the forecast capacity (ASKs) increase of 5.8%, and remains above the 20-year trend growth rate. Passenger revenues, excluding ancillaries, are expected to reach $606bn (+7.5%).

All regions, except Africa, are expected to report profits in 2018 and 2019, with North America ($16.6bn, +12.9%), Asia-Pacific ($10.4bn, +8.3%) and Europe ($7.4bn, unchanged) setting the pace.

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