KUALA LUMPUR (Dec 11): The global airline industry is expected to record a net profit of US$29.3 billion in 2020, up 13% from a revised forecast of US$25.9 billion in 2019, says the International Air Transport Association (IATA).

If achieved, 2020 will mark the industry’s 11th consecutive year in the black, it added.

In a statement today, the airline grouping said overall industry revenue is forecast to increase 4% to US$872 billion in 2020, from US$838 billion expected this year.

Passenger numbers are expected to grow 4% to 4.72 billion, from 4.54 billion in 2019.

"Stronger economic growth should support passenger traffic growth of 4.1% similar to 2019 (4.2%), but below historical trends. Average net profit per departing passenger is expected to increase to US$6.20 in 2020, from US$5.70 in 2019," it added.

Cargo traffic, meanwhile, is expected to rebound moderately by 2% in 2020, with volume forecast to reach 62.4 million tonnes compared with 61.2 million tonnes carried in 2019 — which was the lowest figure in three years. However, this is still below the 2018 figure of 63.3 million tonnes.

The return on invested capital is also expected to improve to 6% in 2020 from expected 5.7% in 2019, while net profit margin is forecast at 3.4%, up from 3.1% for 2019.

Industry operating expenses are projected to climb 3.5% to US$823 billion, from US$796 billion in 2019.

“Slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit, all came together to create a tougher-than-anticipated business environment for airlines. Yet the industry managed to achieve a decade in the black, as restructuring and cost-cutting continued to pay dividends. It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter," said IATA director-general and CEO, Alexandre de Juniac.

"The big question for 2020 is how capacity will develop, particularly when, as expected, the grounded Boeing 737 MAX aircraft return to service and delayed deliveries arrive,” he added.

IATA said jet kerosene prices are also expected to dip next year, averaging US$75.60 per barrel versus US$77 per barrel in 2019. The expected industry fuel bill of US$182 billion will represent 22.1% of expenses, down from US$188 billion or 23.7% of expenses in 2019.

"Total employment by airlines is expected to reach 2.95 million in 2020, up 1.6% on 2019."
 
Regionally, IATA said Asia-Pacific carriers will be helped by the modest recovery in world trade and air cargo next year, showing a US$6 billion net profit in 2020 (up from US$4.9 billion in 2019), for a 2.2% net margin.

"Asia remains the manufacturing centre of the world and revenues from transporting many of those goods are a significant proportion of sales for many of the region’s airlines. But the US-China trade war is assumed just to be on hold; trade tariffs are not reversed," it added.