IATA: Airlines to Keep Reaping Profits in 2019

IATA is forecasting a decade in the black for airlines by the end of 2019, with the global airline industry achieving a net profit of $35.5 billion next year.

This figure is slightly ahead of the $32.3 billion expected net profit in 2018, thanks to lower oil prices and solid, albeit slower, economic growth.

As such, it’s expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital.

The return on invested capital is expected to be 8.6 percent (unchanged from 2018). The margin on net post-tax profits is expected to be 4.0 percent (basically unchanged from 3.9 percent in 2018)

Overall industry revenues are expected to reach $885 billion (+7.7 percent on $821 billion in 2018). Passenger numbers are expected to reach 4.59 billion up from 4.34 billion in 2018)

Passenger traffic (RPKs) is expected to grow 6 percent in 2019, which will outpace the forecast capacity (ASKs) increase of 5.8 percent, and remains above the 20-year trend growth rate.

Passenger revenues, excluding ancillaries, are expected to reach $606 billion (up from $564 billion in 2018). Slower demand growth for passenger traffic (+6.0 percent in 2019, +6.5 percent in 2018). Average net profit per departing passenger of $7.75 ($7.45 in 2018).

All regions, except Africa, are expected to report profits in 2018 and 2019. Carriers in North America continue to lead on financial performance, accounting for nearly half of the industry’s total profits.

North American carriers are expected to deliver the strongest financial performance in 2019 with a $16.6 billion net profit (up from $14.7 billion in 2018). This represents a 6.0 percent net margin and a net profit of $16.77 per passenger, which is a marked improvement from just six years earlier. Net margin is up from 2018 (5.7 percent).

Global connectivity and airfare prices are better than ever, with the number of unique city pairs served by airlines forecasted to grow to 21,332 in 2018 (up by 1,300 from 20,032 in 2017), and more than double 1998 levels.

Meanwhile, the 2019 average return airfare (before surcharges and tax) is expected to be $324 (2018 dollars), which is 61 percent below 1998 levels after adjusting for inflation.

Source: Travelweek Group