Asian airlines' projected earnings to fall short this year but looks set to rebound next year: Iata

The International Air Transport Association said the prospective decline this year was due to the region being the most exposed to weakness in world trade and cargo. PHOTO: ST FILE

GENEVA - Asian carriers will fall short of their projected earnings this year, but are expected to rebound next year even as global uncertainties and operating challenges persist.

The Asia-Pacific carriers will earn a total of US$4.9 billion (S$6.6 billion) this year, below the forecast US$6 billion, the International Air Transport Association (Iata) said on Wednesday (Dec 11).

Last year, they delivered a collective net profit of US$7.7 billion.

Iata said the prospective decline this year was due to the region being the most exposed to weakness in world trade and cargo.

But next year, Asian airlines are expected to earn US$6 billion, with a 2.2 per cent net margin.

The rise will be driven by the modest recovery in world trade and growth, Iata added.

"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," it said.

"But the trade war (between the US and China) is assumed just to be on hold; trade tariffs are not reversed. Consequently, the rise in trade and cargo volumes is moderate."

It added that the net profit per passenger is anticipated to be US$3.34 next year, up from US$2.92 this year.

Last month, the Singapore Airlines Group - which includes the national carrier, low-cost carrier Scoot and SIA Engineering - saw net profit rise 5.1 per cent for the six months ending Sept 30 because of higher passenger traffic.

That boosted its revenue by 5.3 per cent or $418 million from the previous corresponding period, the group said.

Globally, airlines are expected to make a collective net profit of $29.3 billion next year, up from the projected $25.9 billion this year.

This is owing to such factors as reduced fears of a recession and lowered tensions in the US-China trade war.

Passenger numbers are expected to reach 4.72 billion, four per cent more than this year.

Meanwhile, freight tonnes are expected to recover to 62.4 million. This is a two per cent increase over this year's 61.2 million tonnes, which was the lowest in three years.

Iata director general and chief executive officer Alexandre de Juniac said: "It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter."

But there is a potential problem: the rise in aircraft supply exceeding the demand growth next year, noted Iata.

More than 2,100 aircraft are scheduled to be delivered next year, and the Boeing 737 Max airplanes - grounded by regulators after two fatal crashes this year - could return to service.

Mr de Juniac said: "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."

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