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Home / World / According to industry group, the airlines are on the way to their worst gain in 5 years

According to industry group, the airlines are on the way to their worst gain in 5 years



The aviation industry expects the International Air Transport Association, a global trading group of 290 airline companies, to announce a $ 28 billion profit this year on Sunday. These earnings prospects are 21% lower than the Federation's forecast for 2019, published in December. This would be the industry's lowest gain in five years.

"The business environment for airlines has deteriorated with rising fuel prices and a significant slowdown in world trade," the group said in a statement. "Margins are being put under pressure by rising costs across the board."

IATA expects airline costs to increase by 7.4% this year and exceed expected revenue growth of 6.5%. This means that airlines will carry about 1

1% fewer passengers in 2019 than in 2018.

Oil prices, which have risen in recent months as tensions between the United States, Iran and Venezuela escalated, play a major role in the airlines gloominess Set against 2019. Aviation fuel accounts for a quarter of the operating costs of airlines, and according to IATA aviation fuel this year will cost 27.5% more than two years ago.

Rising trade voltages do not help either. They will most directly harm the freight industry, even if passenger traffic could fall, as people rethink holidays in some places and consumers spend more on imports.

IATA expects growth in freight demand to slow significantly. The growth in passenger demand for air travel will also slow down somewhat, albeit far less dramatically than that of freight.

"It's not easy to make money," said Alexandre de Juniac, IATA CEO, in a statement.

  Boeing urgently needs to bring the 737 Max back into the air. It's going to be hard to get approval.
Although the industry did not mention the 737 Max in its forecast, Boeing's [ BA ) grounded aircraft is still one the industry's most important. Airlines continue to deal with canceled flights because not all fleets are available to them. This remains another factor in the tight profits of airlines. Boeing said it would compensate the airlines for part of their expenses because they are on the ground.

IATA found that the aviation industry is still in good shape. It will be the tenth profitable year in a row and the airlines have broken through the boom-and-bust cycle that has shaped their business for decades. The airlines have consolidated, the global economy has been strong and demand for air travel has been consistently high in recent years.

However, the industry warned that investors need to prepare for more difficult times.

"A decline in the trade environment no longer plunges the industry into a deep crisis," de Junac said. "But under the current circumstances, the industry's great achievement of creating value for investors with normal profitability is at risk."


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