The International Air Transport Association (IATA) has forecast that the global airline industry will produce a net profit of $29.3 billion in 2020, improved over a net profit of $25.9 billion expected in 2019.
Highlights of expected 2020 performance include:
- The return on invested capital is forecast to be 6.0% (improved from 5.7% expected in 2019).
- The net profit margin is forecast at 3.4% (up from 3.1% for 2019).
- Overall industry revenues are forecast to reach $872 billion (+4.0% on $838 billion in 2019).
- Industry operating expenses are projected to climb 3.5% to $823 billion from $796 billion in 2019.
- Passenger numbers are expected to reach 4.72 billion (up 4.0% from 4.54 billion in 2019).
- Freight tonnes carried are expected to recover to 62.4 million, a 2.0% increase over 61.2 million tonnes carried in 2019, which was the lowest figure in three years.
Cargo improvement
Cargo traffic turned negative last year for the first time since 2012. The 3.3% annual decline in demand was the steepest drop since 2009 during the Global Financial Crisis. Freight carriage, meanwhile, slipped to 61.2 million tonnes from 63.3 million tonnes in 2018. Cargo traffic is expected to rebound moderately with 2.0% growth in 2020, with tonnes forecast to reach 62.4 million, which is still below the 2018 result. Yields will continue to slide with a 3.0% decline forecast for 2020, an improvement from a 5.0% decline in 2019. Cargo revenues will slip for a third year in 2020 with revenues expected to total $101.2 billion, down 1.1% from 2019.
2019 performance
Economic performance in 2019 was weaker than had been anticipated at the time of the June forecast. This aligns with weaker global GDP growth of 2.5% (versus 2.7% forecast in June) and world trade growth of just 0.9% (down from 2.5% forecast in June). These negative developments contributed to softer passenger and cargo demand and corresponding weaker revenue growth, as passenger yields fell 3.0% and cargo yields dropped 5.0% compared to 2018. Operating expenses did not rise as much as anticipated (3.8% vs. 7.4% June forecast) largely owing to lower-than-expected fuel costs; but this was not enough to offset the softness in revenue.
Source : Various Agencies