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ISTANBUL – The global airline industry is expected to generate US$9.8bn in net profits in 2023, the International Air Transport Association (IATA) said today during its 79th Annual General Meeting in Istanbul, Türkiye.
The latest outlook doubles the forecast net profits in the guidance published in December, which estimated yields to be around US$4.7bn. Operating profits are expected to increase from US$10.1bn in the previous guidance to US$22.4bn.
The changes reflect the state of the air travel industry, which is recovering at a faster pace than IATA predicted during the COVID-19 pandemic. The association foresees that 4.35bn people will travel by air this year, almost reaching pre-pandemic levels of 4.54bn.
While IATA estimates that cargo volumes will reach 58.7 million tonnes, the forecast for cargo revenues is less optimistic, with a sharp decline from US$210bn in 2021 and US$207bn in 2022 to US$142.3bn this year. However, these are still well above the US$100bn earned in 2019.
“Airline financial performance in 2023 is beating expectations. Stronger profitability is supported by several positive developments. China lifted COVID-19 restrictions earlier in the year than anticipated. Cargo revenues remain above pre-pandemic levels even though volumes have not. And, on the cost side, there is some relief. Jet fuel prices, although still high, have moderated over the first half of the year,” said Willie Walsh, Director General IATA.
Proifts and Losses by Region
By region, North American carriers are expected to generate US$11.5bn in net profits this year compared to US$9.1bn in 2022. For European airlines, the numbers are US$5.1bn versus US$4.1bn in the last year. Meanwhile, airlines in the Middle East should generate a US$2.0bn net profit. In 2022, they generated US$1.4bn.
Other regions are showing signs of recovery, although they will remain in negative numbers. Airlines in the Asia Pacific region should record a net loss of US$6.9bn versus losses of US$13.5bn in 2022. Also, Latin American carriers will lose US$1.4bn compared to losses of US$3.9bn last year. African airlines are also expected to record net losses of $0.5bn versus $0.8bn losses registered in 2022.
“Economic uncertainties have not dampened the desire to travel, even as ticket prices absorbed elevated fuel costs. After deep COVID-19 losses, even a net profit margin of 1.2% is something to celebrate! But with airlines just making $2.25 per passenger on average, repairing damaged balance sheets and providing investors with sustainable returns on their capital will continue to be a challenge for many airlines,” said Walsh.
https://airwaysmag.com/iata-blocked-funds-growth-and-connectivity/
Featured Image: Boeing 787 rear view at Golden Hour. Photo: Max Langley/Airways.
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