The International Air Transport Association (IATA) is maintaining its June forecast for the global air transport industry to post a $28 billion net profit this year, though director general and CEO Alexandre de Juniac said on Tuesday he had to “recognize that the trend is more in declining mode than increasing mode” in the wake of the Boeing Max 737 groundings, weakening demand, “big” uncertainty on the price of oil, and a spate of airline bankruptcies in Europe. Two French airlines—Aigle Azur and XL Airways France—ceased trading this month, European travel group Thomas Cook filed for bankruptcy on Monday, and Slovenia’s Adria Airways halted the majority of flight operations for two days on September 24 and 25 due to liquidity problems. Thomas Cook’s insolvency is prompting the UK civil aviation authority to launch what it calls “the biggest peacetime repatriation” in the country’s history.
Speaking during a teleconference with media ahead of the 40th Assembly of the International Civil Aviation Organization (ICAO), beginning Tuesday in Montreal, de Juniac said the recent bankruptcies proved the “fragile [financial] state of the industry.” The group expects airlines globally to earn a 3.2 percent net profit margin this year and forecasts call for European airlines to deliver a net profit per passenger of $6.75 and a net margin of 3.7 percent. Nevertheless, they remain exposed to a set of risks including economic factors, de Juniac noted. “It is always a concern for us when an airline collapses,” he said, pointing out that the wave of bankruptcies in Europe started some 18 months ago. Alitalia filed for bankruptcy in May 2017; Air Berlin and UK carrier Monarch collapsed in October 2017; Primera Air and Cyprus’s Cobalt failed last year; and Germania, Flybmi, and Iceland's Wow succumbed earlier this year.
De Juniac reiterated his call for global aviation safety regulators to harmonize the Max’s re-entry into service, warning an uncoordinated approach would “complexify” the entire exercise. “It would create mistrust in the old system [of a single certification]. It is a big concern,” he added. Addressing another concern over the prospect of a patchwork of conditions and timelines developing if, as the FAA on Monday insisted, each government decides for itself when to return to Max to service, de Juniac said he hoped the meeting “will lead to a better alignment even if the FAA, and each country, make their own decision.”
“We are always optimistic,” he added. “We are permanently advocating in the favor of an alignment among regulators, alignment on conditions, alignment on schedules, for the re-entry of the Boeing 737 Max into service.”
The head of the IATA also called on governments of ICAO member states to participate in the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) from the voluntary period before it becomes mandatory in 2027 and stick to the principle that aviation’s international emissions should count only once, with no duplication. The ICAO assembly backed CORSIA at its meeting three years ago, and the plan today “is a reality with airlines tracking their emissions,” de Juniac said. “Unfortunately, there is a real risk that CORSIA will be undermined by governments piling on additional carbon pricing instruments,” he added, in a clear message to the EU and its member states. “They are branded ‘green taxes’ but we have yet to see any funds allocated to actually reducing carbon. CORSIA was agreed as the single global economic measure to achieve carbon-neutral growth by generating $40 billion in climate funding and offsetting around 2.5 billion tonnes of CO2 between 2021 and 2035. Governments need to focus on making that commitment a success.”
- Air Transport