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IATA lowers profit forecast for 2018

IATA has lowered its profit forecast for the industry in 2018, citing higher fuel and labour costs, as well as interest rates.

The association is now forecasting a collective net profit of $33.8 billion for airlines, down from its December 2017 forecast of $38.4 billion.

The new forecast is also lower than the $38 billion profit posted in 2017, although IATA says comparisons to the figure is distorted by special accounting items such as one-off tax credits which boosted profits last year.

IATA now expects fuel price to average $70 per barrel, up from its previous forecast of $60 a barrel, and the $54.9 a barrel logged last year.

It is also expecting strong passenger demand, with yields to grow by 3.2%, after a 0.8% decline in 2017. The restocking cycle has come to an end for the cargo market however, and demand in the segment is expected to grow 4%, dropping from the 9.7% jump last year.

“Solid profitability is holding up in 2018, despite rising costs. The industry’s financial foundations are strong with a nine-year run in the black that began in 2010,” says IATA director general and CEO Alexandre de Juniac.

"And the return on invested capital will exceed the cost of capital for a fourth consecutive year. At long last, normal profits are becoming normal for airlines."

North American carriers remain the most profitable, and are expected to post a net profit of $15 billion, followed by European airlines with $8.6 billion and Asia Pacific carriers with $8.2 billion.

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