The International Air Transport Association (IATA) on Sunday downgraded outlook for the global aviation industry’s profit to $28 billion from $35.5 billion, forecast in December 2018.
The revised outlook is also lower than the net profit estimate for 2018, which IATA had pegged at $30 billion.
“The business environment for airlines has deteriorated with rising fuel prices and a substantial weakening of world trade,” the association of global airlines said in a statement.
“In 2019, overall costs are expected to grow 7.4 per cent, outpacing a 6.5 per cent rise in revenues. As a result, net margins are expected to be squeezed to 3.2 per cent (from 3.7 per cent in 2018). Profit per passenger will similarly decline to $6.12 (from $6.85 in 2018),” it said.
Noting that 2019 will be the 10th consecutive year of profit for the sector, IATA said margins were declining on the back of rising costs.
“Weakening of global trade is likely to continue as the US-China trade war intensifies. This primarily impacts cargo business, but passenger traffic could also be impacted as tensions rise,” said Alexandre de Juniac, IATA’s Director General and CEO.
The IATA, however, said a downturn in the trading environment would not plunge the industry into a deep crisis.
Earlier in the day, the association announced that Lufthansa Group CEO Carsten Spohr had assumed charge as Chairman of the IATA board of governors for a one-year term, effective from the conclusion of the 75th IATA Annual General Meeting in Seoul, South Korea. Spohr is the 78th chair of the IATA board of governors.
Among the members of the IATA board of governors for 2019-2020, announced on Sunday, are Ajay Singh, Chairman and Managing Director of Indian budget airlines SpiceJet.