Home Aviation Spiking fuel costs could dip airlines’ profits – IATA

Spiking fuel costs could dip airlines’ profits – IATA


The International Air Transport Association (IATA) has projected that profits of airline operators may not hit the earlier forecast by December due to increasing costs of aviation fuel.

IATA’s Chief Executive, Alexandre de Juniac said Thursday that his organisation would issue fresh forecasts next week.

The previous profit projections for December, according to de Juniac, were based on oil price benchmark of $60 per barrel, even though Brent crude is currently over $77per 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 IATA’s annual general meeting scheduled for Sunday — June 3, 2018.

But even with the obvious optimism expressed by IATA, Airline operators such as Singapore Airlines Ltd and Malaysia’s AirAsia Group Bhd had already posted strong profits in the last quarter ended March. Analysts had attributed their profit rise to tourism boom in the region.

IATA had predicted a record of $38.4 billion net profit for the airline industry by December 2018, with $27.9 billion coming from U.S. and European airlines.

The global air transport organisation – IATA – represents some 280 airlines comprising 83 per cent of global air traffic.

Much of the traffic is recorded in Europe, the Americas and Asia, with African airlines having a little share. This reflects on their annual profit margins and projections.