IATA revises down 2019 airline profits, sees stability in 2020

GENEVA (Reuters) – Global airlines reduced a forecast for industry-wide profits in 2019 under the weight of trade tensions, but predicted a modest recovery next year on the assumption that tariff wars will recede in the run-up to the U.S. presidential election.

Airline net profits are now expected to fall to $25.9 billion from $27.3 billion last year, before recovering to $29.3 billion in 2020, the International Air Transport Association said. In June it had forecast $28 billion in profit for 2019.

The starkest deterioration is being felt in airlines’ cargo businesses – where a 3.3% drop in freight demand marked the sharpest decline since the 2009 financial crisis, with revenue down 8% year-on-year.

Growth in world trade has all but evaporated to an expected 0.9% this year, sharply down from the 2.5% forecast in June and the 4.1% expansion predicted a year ago, IATA said.

Underpinning the partial recovery predicted next year, IATA forecast more robust trade growth of 3.3% as “election-year pressures in the U.S. contribute to reduced trade tensions”.

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