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IATA lowers forecast of airlines’ profit in 2018 because of rising fuel costs and labor force

04.06.2018,15:40


June 4, Fineko/abc.az. The International Air Transport Association (IATA) has reduced the forecast of world airlines’ total net profit in 2018 from expected $38.4 bn in December to $33.8 bn.

According to Organization’s forecasts, air carriers’ revenue will be $834 bn that is by 10.7% more than versus the result of 2017.

"The main drivers of revision of net profit forecast are airlines’ growing costs, primarily on fuel and labor. The average annual cost of Brent crude oil will be $70 a barrel. The figure is by 27.5% higher than in 2017 and by 16.7% more than the previous forecast of experts. At the same time, cost of jet fuel is expected to grow by 25.9% up to $84 a barrel. Fuel costs will be more than 24% of total operating costs of airlines," IATA says.

At the same time, capital expenditures are expected to increase as well: in 2018 the airlines will be supplied more than 1,900 aircrafts against 1,722 at the end of 2017. According to IATA forecasts, passenger carriages are projected to increase by 7% in 2018. The index is less than annual growth of 8.1% recorded in 2017, but is still faster than the average for 20 years (5.5%) for the sixth consecutive year.

In 2017 the airlines earned record $38 bn, while the IATA assessment was at the level of $34.5 bn. However, the organization's experts explain discrepancy between the figures with one-time tax benefits that led to increased profits.

IATA unites 290 airlines, which perform more than 80% of all global air transportation.

 

Keywords: IATA