IATA: rising fuel costs to squeeze airline profits this year
This year will see thinner profit margins globally for airlines as they start to feel the squeeze of rising jet fuel prices, trade group IATA says.
IATA says it will revise down its initial forecast of a $38 billion profit for the industry due to the pricing pressure, but the industry generally remains in good shape.
"In the past, such a rapid rise in a key input cost might have plunged the industry back into losses. As a result of the efforts of the industry to restructure and re-engineer their businesses, we are still expecting solid profits this year. But probably not at the levels we were anticipating in December," IATA director-general Alexandre de Juniac told reporters ahead of the group’s AGM in Sydney.
It will release an updated forecast for airline profits next week.
de Juniac said air passenger traffic is still rising, recording an overall 6.2% growth rate in April.
However that rate is down from March 2018.
IATA’s initial profit projections were made late last year when oil was priced at $60 per barrel.
It has risen about 15% since then.
Juniac said higher fuel prices have yet to be passed on in higher fares, while labor costs are also rising much faster than revenue growth.
US airline CEOs have already warned rising fuel costs will likely result in higher fares after the summer.
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