Wednesday 19 June 2019

Airline chiefs predict profit falls and consolidation

Warning: Alexandre de Juniac, director general and CEO of the International Air Transport Association. Photo: Jean Chung/Bloomberg
Warning: Alexandre de Juniac, director general and CEO of the International Air Transport Association. Photo: Jean Chung/Bloomberg

Jamie Freed

Global airlines slashed a widely watched industry profit forecast by 21pc yesterday as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.

The International Air Transport Association (IATA), which represents approximately 290 carriers or more than 80pc of global air traffic, said the industry is expected to post a combined $28bn (€25bn) profit in 2019, down from a December forecast of $35.5bn (€31.7bn).

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"Airlines will still turn a profit this year, but there is no easy money to be made," IATA Director General Alexandre de Juniac said at the group's annual meeting in Seoul.

"Creeping protectionist or isolationist political agendas are on the rise."

Airlines reported $30bn (€26.7bn) in annual profits in 2018, but conditions in the air cargo market have weakened substantially.

IATA voiced concerns the trade tensions, which have forced several carriers in Asia to ground or delay taking delivery of air freighters, could spill into the passenger market.

Passenger capacity growth, which reached 6.9pc in 2019, is forecast to slow to 4.7pc this year, with average fares flat following a decline in 2018. In a $900bn (€803.6bn) cut-throat industry brimming with tensions, the head of Germany's Lufthansa hit out at low-cost airlines who slash fares to what he called unrealistic levels.

"I'm not complaining about the competition. Don't get me wrong ... but that kind of ticketing below €10 is hurting the ... trust of public and politicians (and) congesting air traffic," chief executive Carsten Spohr said.

The practice also undermines climate goals by spurring trips that would not otherwise exist, he added.

The CEO of recently acquired UK-based Flybe said she saw a risk of "massive consolidation without independent and challenging carriers".

Christine Ourmières-Widener plans to step down on July 15, months after the sale of the low-cost airline to a consortium including Richard Branson. (Reuters)

Irish Independent

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