By Olivia Bugault

 

Airlines' performance will be weaker than expected in 2019, hit by a tough economic environment and continued uncertainties, but 2020 looks "somewhat brighter," the International Air Transport Association said.

Net profit for the airline industry worldwide should come in $2 billion lower than initially expected at $25.9 billion, IATA's revised forecast showed.

"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," IATA's Chief Executive Officer Alexandre de Juniac said.

North American airlines should keep outperforming their peers in 2019, with profits accounting for 65% of the industry's total profit, a trend that will also continue over the next year, according to IATA estimates.

Airlines in this region are expected to earn a total estimated net profit of $16.9 billion in 2019, more than twice as much as every other region.

Europe should take the second spot with $6.2 billion of net profit in 2019, a steep drop compared to $9.1 billion the prior year, according to IATA.

European airlines have been struggling with Brexit, several warnings and bankruptcies this year. German carrier Deutsche Lufthansa AG (LHA.XE), Ireland-based Ryanair Holdings PLC (RYA.LN) and low-cost easyJet PLC (EZJ.LN) are among the EU airlines that issued warnings this year.

Global airlines' financial performance should improve next year with a total net profit of $29.3 billion--including $16.5 billion from North American airlines.

Uncertainties remain however. "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," Mr. de Juniac said.

 

Write to Olivia Bugault at olivia.bugault@wsj.com

 

(END) Dow Jones Newswires

December 11, 2019 12:29 ET (17:29 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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