The airline industry’s main lobbying body, the International Air Transport Association (IATA), doubled its forecast for the industry’s global net profit in 2023, as increased flights in North America and Europe pushed ticket prices higher.
Global industry profit is expected to reach $9.8 billion this year, doubling its December estimate of $4.7 billion, IATA said on Monday. While the institution expects about 4.35 billion passengers to travel in 2023, this figure corresponds to about 96 percent of 2019 levels.
IATA Director General Willie Walsh said in an interview with Bloomberg Television that he was “cautiously optimistic” about the outlook, while “all things considered, we believe this will be a good year for aviation.”
The number of passengers reached 96 percent of the pre-pandemic level
Stating that the operating profit of the sector is expected to reach 22.4 billion dollars in 2023, Walsh continued his words as follows:
“Approximately 4.35 billion people are expected to travel in 2023, which is approaching 4.54 billion people traveling by plane in 2019. The cargo volume is expected to be 57.8 million tons this year, which is the sharpest figure in the international trade volume. With the slowdown, it fell below 61.5 million tons transported in 2019.
Total revenues are expected to reach $803 billion, an increase of 9.7 percent compared to the previous year. Industry revenues are forecast to exceed the $800 billion mark for the first time since 2019 ($838 billion). The increase in expenses is expected to be limited to 8.1 percent annually.
“The sector’s return to net profitability is a great success”
Regarding the growth outlook of the aviation industry, Willie Walsh said, “Airlines’ financial performance exceeds expectations this year. Stronger profitability is supported by several positive developments. China lifted the Kovid-19 restrictions earlier than expected during the year. Although volumes did not increase, cargo revenues remain above pre-pandemic levels. “There is some relief on the cost side. Jet fuel prices, although still high, remained moderate in the first half of the year.” made his comment.
Noting that the sector’s return to net profitability is seen as a great success, even with a net profit margin of 1.2 percent, Walsh said, “First, the sector’s operating with profitability in a period of economic uncertainties seems to be an important success. Second, net profit growth 2020- “It came after the largest loss of $183.3 billion in aviation history in 2022. It should be noted that the airline industry entered the Covid-19 crisis at the end of a historic profit streak with an average net profit margin of 4.2 percent for the 2015-2019 period,” he said.
Commenting on the profitability of airlines, Walsh concluded his words as follows:
“Economic uncertainties have not dampened the desire to travel, even as ticket prices have absorbed rising fuel costs. Even a 1.2 percent net profit margin is pleasing, after deep Kovid-19 losses. However, airlines earn an average of $2.25 per passenger. In such an environment, it will continue to be difficult for many airlines to repair damaged balance sheets and provide sustainable capital returns to investors.”