Airline profits could see a sharper decline this year than previously estimated, as trade tensions affect global trade and business confidence, warned the International Air Transport Association (IATA), which expects a modest recovery next year.
According to IATA forecasts, profits recorded by airlines worldwide in 2019 are expected to reach $25.9 billion, a 5.1% decline compared to 2018. The improvement in earnings in 2020 is conditional on a “suspension of hostilities” in global trade disputes, IATA estimates.
In June, IATA estimated a profit of $28 billion for this year.
Additionally, IATA revised downward its revenue estimates for this year to $838 billion, from $899 billion, and announced it expects an improvement next year, when revenues are projected to reach $872 billion.
Air cargo demand is expected to decrease by 3.3% this year, the most significant decline since the 2009 financial crisis. Air cargo is considered a barometer of the global economy, as it transports goods worth $6,000 billion and is responsible for 35% of world trade in terms of value.
Global trade growth will stand at 0.9% this year, compared to a 2.5% increase estimated in June, IATA warned.
Next year, the institution expects a 3.3% growth in world trade, as pressures in the US election year will contribute to reducing trade tensions.
Source: Economica
Frequently Asked Questions
Why did IATA lower its profit forecast for 2019?
IATA lowered its forecast due to global trade tensions and declining business confidence, which have negatively impacted both passenger and cargo demand.
What is the expected profit for the airline industry in 2019?
Airlines are expected to record a total profit of $25.9 billion in 2019, representing a 5.1% decrease compared to the previous year.
How is the air cargo sector performing?
Air cargo demand is projected to drop by 3.3% in 2019, marking its worst performance since the 2009 financial crisis, reflecting broader economic slowdowns.