IATA revises airline profit forecast due to higher fuel prices

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Airplane on tarmac
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SYDNEY -- Rising fuel prices have led IATA to revise downward its airline profit forecast for 2018.

Airlines globally will earn a net profit of $33.8 billion this year, IATA predicted in the revised forecast, which it released Monday during its Annual General Meeting here. That compares with the forecast IATA put out in December projecting a $38.4 billion profit.

Last year, the airlines worldwide made $38 billion.

IATA projects that U.S. airlines will earn net profits of $15 billion this year, down from $18.4 billion in 2017.

"I want to be clear that there has been no dramatic downward shift in airline profits since 2017," IATA general secretary Alexandre de Juniac said at the conference. But he acknowledged that macroeconomic conditions are more difficult this year than they were in 2017.

Fuel was trading at $65.90 per barrel on Sunday night, up 41% year over year.

IATA projects that jet fuel prices over the course of this year will average 25.9% more than last year.

Countering the increasing costs will be a projected 7% jump this year in air passenger traffic.

IATA said that several geopolitical issues pose risks to the industry, including uncertainty over how Brexit will impact Europe-U.K. flying and growing protectionism.

Trade disputes brought on by the recent U.S. introduction of steel and aluminum tariffs could also pose a problem.

"When you put up barriers to trade, it's bad news for passenger traffic," de Juniac said.

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