Airline profits this year unlikely at December forecast level: IATA chief

SYDNEY - 31 May 2018: Profits in the airline industry are unlikely to reach the record levels forecast in December due to a jump in fuel costs, the head of the world’s leading air transport group said on Thursday.

International Air Transport Association (IATA) Chief Executive Alexandre de Juniac said his organization will issue fresh forecasts next week, and that airline profits were still likely to be robust.

The December projections were based on oil at $60 per barrel, Juniac said. Brent crude LCOc1 is currently over $77 per barrel, having risen roughly 15 percent so far this year.

“We are probably at the peak of the (profit) cycle. Next year we don’t know yet but probably less positive,” Juniac said at a media event ahead of the organization’s annual meeting starting on Sunday.

Airline operators such as Singapore Airlines Ltd (SIAL.SI) and Malaysia’s AirAsia Group Bhd (AIRA.KL) posted strong profits in the latest quarter ended March amid a tourism boom in the region.

In December, IATA predicted a record $38.4 billion net profit for the airline industry in 2018, with $27.9 billion coming from U.S. and European airlines. IATA represents some 280 airlines comprising 83 percent of global air traffic.

Juniac said higher fuel prices had not yet been passed on in fares and that infrastructure and labor costs as well as taxes were rising.