The strong demand to fly, the rise in ticket prices and the reopening of China are driving the air business to the point that the employers’ association IATA has revised upwards its profit forecast for companies in 2023. The international association that grouping the airlines estimates that they will earn more than 9,800 million dollars (9,165.45 million euros) this year, thus doubling their previous forecast, which estimated the profit of these companies at 4,700 million dollars (4,395 million euros).
“The financial performance of the airlines in 2023 is exceeding expectations,” said Willie Walsh, Director General of IATA and former CEO of IAG, during the annual summit that the employers are holding these days in Istanbul.
With the return of flights in China and the increase in air business in India, cargo revenues that remain above pre-pandemic levels, more expensive airline tickets and some cost relief (although still high, the price of fuel is moderating), the profitability of the companies improves after three years of billion-dollar losses, Walsh added.
Thus, industry revenue is expected to reach 803,000 million dollars in 2023 (9.7% than in 2022 and -4.1% in 2019). Regarding passenger revenue, the forecast is to reach 546,000 million dollars (27% compared to 2022, -10% compared to 2019). “With Covid restrictions now lifted in all major markets, the industry is expected to reach 87.8% of 2019 levels of revenue per passenger per kilometer transported,” says the IATA analysis, made public on Monday. . In this sense, the association estimates that some 4,350 million people will travel this year, very close to the 4,540 million who flew in 2019.
In cargo, IATA considers that volumes will reach 57.8 million tons, somewhat below the 61.5 million tons transported in 2019 with a sharp slowdown in international trade volumes. The price increase would save this drop in volume. However, the economic and geopolitical environment presents several risks to the outlook. Among others, the net profit margin has narrowed to 1.2%, so the profitability of the sector is fragile and could be affected (positively or negatively) by various factors.
Specifically, IATA highlights that the measures to fight inflation are maturing at different rates in the different markets and that there is still a risk of recession. Likewise, the war in Ukraine continues and an escalation of tension could have very negative consequences for world aviation. Problems in the supply chain also remain due to political tensions and aircraft manufacturers are finding it difficult to complete the production cycle.
