Another legal setback for Trump

**Gideon Long** (0:01)
Net zero by 2050, the airline industry ain't going to make it.

**Willy Walsh** (0:05)
I think the challenge of net zero by 2050 will probably be insurmountable.

**Marie Owens Thompson** (0:09)
Airlines cannot provide the things that we need to reach net zero by 2050

**Gideon Long** (0:16)
It's World Business Report from the BBC World Service. I'm Gideon Long. Yeah, we'll look at the airline industry's emissions target and the impact of the war in the Middle East on flights. Plus a legal reverse for Donald Trump over his migration policy. And China's Xi Jinping is in North Korea. What's he after?
The airline industry is going to miss its target of becoming net zero for carbon emissions by 2050 That's according to Willy Walsh, the head of the International Air Transport Association, IATA. Here's what he had to say at IATA's annual general meeting in Rio de Janeiro.

**Willy Walsh** (0:58)
We were very clear when we committed to net zero in 2050 that it couldn't be done by airlines on their own. It needed everybody to play their part. And we're not seeing that. We're not getting the new aircraft that should have been delivered. So we're not witnessing the traditional reduction or improvement in efficiency from a fuel point of view with the aircraft. So that's very disappointing. So they're not playing their part.
Fuel companies have given up. You know, they recognize that they are incentivized to produce fossil fuels and that's what they're going to continue to do. So, you know, they talked a good game. They promised to invest. They're not doing it. And we're not seeing the level of investment that not only was promised, but that we absolutely need to get to net zero in 2050 So we're way off track and unless there's a big change in that, I think the challenge of net zero in 2050 will probably be insurmountable.

**Gideon Long** (1:54)
So plane makers, fuel companies, Willy Walsh even blamed air traffic controllers and airports for what he expects to be a missed target. He blamed everyone, in fact, apart from the airlines themselves. I spoke to Marie Owens Thompson, IATA's chief economist, who's also in Rio.

**Marie Owens Thompson** (2:10)
I think that's accurate, you know, factually accurate, because airlines cannot provide the things that we need in order to become sustainable or reach net zero by 2050

**Gideon Long** (2:24)
But what are the airlines themselves doing to try and reach that net zero target?

**Marie Owens Thompson** (2:29)
Airlines are trying to buy new aircraft, but we're not getting those new aircraft because of the supply chain disruption that is still lingering with us ever since the COVID crisis. So we have a backlog of aircraft orders of 18,000 aircraft. That's more than half the active fleet. We are not getting the new planes. We're flying with older planes. Older planes mean more fuel consumption. And I think that largely explains maybe some of the iron that you might have heard in Willie's speech.

**Gideon Long** (3:02)
It's clearly a difficult time for the airline industry. If we look at the Middle East war, what impact do you expect that war to have on the industry this year?

**Marie Owens Thompson** (3:11)
A regional conflict in another industry might remain a regional conflict, but in our industry, it ripples across the whole system. Our forecast is that traffic growth in our industry this year will be limited to 2.1 percent. Half of what we thought might be the case before the crisis.

**Gideon Long** (3:30)
And you're expecting profits to halve, is that right, from last year?

**Marie Owens Thompson** (3:34)
Yeah, exactly. So we're expecting 2 percent net profit margins down from 4.3 that we were expecting before the crisis, so less than half. And it's sort of miraculous that the industry can still be profitable when the jet fuel price momentarily, you know, literally doubled. Now we are thinking 70 percent higher for the year than what we thought before the crisis. And that's what airlines are facing currently. But this forecast is fragile. Should the jet fuel prices go higher? And should the consumer lose confidence in their spending capacity? Well, then we could be flirting with recessionary scenarios rather than sort of the stagflation we're expecting at the moment. And we're perilously close to the zero line, obviously, in terms of financial results. Balance sheets are weak among airlines, and they have very little balance sheet strength with which to defend themselves against any kind of crisis such as this one.

**Gideon Long** (4:35)
I guess what our listeners will be worried about when they hear this, they'll think, okay, it's clearly a tough time for airlines, their costs have risen, they're going to recoup some of that money by putting up prices. How real are those fears?