IATA Says Airlines Will Make More Money Next Year

Bruce Parkinson, Open Jaw

The International Air Transport Association predicts that the global airline industry will produce a net profit of US$29.3 billion in 2020, improved over a net profit of US$25.9 billion expected in 2019. If achieved, 2020 will mark the industry’s 11th consecutive year in the black. 

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 US$872 billion (+4.0% on US$838 billion in 2019).
  • Industry operating expenses are projected to climb 3.5% to US$823 billion from US$796 billion in 2019.
  • Passenger numbers are expected to reach 4.72 billion (up 4.0% from 4.54 billion in 2019).
  • Stronger economic growth should support passenger traffic (RPKs) growth of 4.1% similar to 2019 (4.2%) but below historical trends. 
  • Average net profit per departing passenger of US$6.20 ($5.70 in 2019)

2019 Performance

Economic performance in 2019 was weaker than had been anticipated midway through the year. 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.  

“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,” said Alexandre de Juniac, IATA’s Director General and CEO. 

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

Regional Outlook for 2020

The regional profit picture is mixed in both 2019 and 2020. Africa, Middle East and Latin America are all expected to lose money in 2019, with carriers in Latin America returning to profit in 2020 as regional economies strengthen. Airlines in North America continue to lead on financial performance, accounting for 65% of industry profits in 2019 and around 56% of aggregate earnings in 2020. Financial performance is expected to improve or remain the same compared to 2019 in all regions except for North America, where expected capacity growth owing to new aircraft deliveries could put pressure on earnings. 

Bruce Parkinson

Bruce Parkinson Editor-in-Chief

An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.

Leave a Comment...

(will not be published)