The airline industry reduces profit prospects; merchandise trade is affected by the trade war

SEOUL – Global trade tensions and increased protectionism have pushed the International Air Transport Association (IATA) to reduce its earnings outlook for 2019 in the air transport sector.

S addressing CNBC at the annual general meeting of this group, IATA Director General and Chief Executive Officer, Alexandre de Juniac, said the disruptions in international trade had particularly affected cargoes.

"This has had a significant impact on our prospects and it is clear that this stage of the evolution of international trade stems directly from trade wars and protectionist measures," said Mr de Juniac.

The industry expects airline profits to reach $ 28 billion in 2019, down from $ 30 billion reported in 2018. Previously, IATA had forecast that the profits for 2019 would be $ 35.5 billion.

The intensification of the trade war between the United States and China has resulted in a drop in freight demand in the airline industry, the downward trend to continue. Growth in this segment is expected to be stable this year, after rising 3.4% in 2018 and 9.7% the year before.

Asia, which accounts for about 40% of global air cargo traffic, is particularly vulnerable to global trade wars, but Juniac said strong pbadenger demand could help remove the trade barriers the region faces.

"Asia also represents a very strong demand for growth." China, in five years, will become the [biggest] global market, India, in the next 8-10 years, will become the third [biggest] We therefore believe that pbadenger demand will not be exceeded, but that we may be compensating for the consequences of the cargo of protectionist measures and trade wars. "

The global airline industry is entering its tenth consecutive year of profits, but the trade and consumer-driven industry could be on the line of fire if trade disagreements intensify.

De Juniac said the industry's work to reduce costs and increase competitiveness over the past decade would make it more resilient.

"I think this industry is significantly more resilient than before and much less exposed to the consequences of an economic downturn," he said. "However, if there is an economic downturn, this industry will suffer – but probably less than that of 15 or 20 years ago."

IATA represents 290 airlines, accounting for 82% of total air traffic. Its head office is in Montreal.