The International Air Transport Association (IATA) predicts the global airline industry to generate a net profit of $9.8 billion in 2023.
IATA 79th Annual General Assembly and World Air Transport Summit continue in Istanbul.
Within the scope of the event, IATA’s 2023 projections were also shared.
Commenting on the expectations, IATA Director General Willie Walsh said that the airline industry’s net profit is expected to reach $9.8 billion (1.2% net profit margin) in 2023, more than double the previous estimate of $4.7 billion.
Stating that the operating profit of the sector is expected to reach $22.4 billion in 2023, Walsh continued his words as follows:
“Approximately 4.35 billion people are expected to travel in 2023, approaching 4.54 billion people traveling by plane in 2019. Cargo volume is expected to be 57.8 million tons this year; this figure fell below the 61.5 million tons carried in 2019 with the sharp slowdown in international trade volume.
Total revenues are expected to reach $803 billion, an increase of 9.7% 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% annually.”
“The sector’s return to net profitability is a great success”
Regarding the growth outlook for the aviation industry, Willie Walsh said, “Airlines’ financial performance exceeds expectations this year. Stronger profitability is supported by several positive developments. China lifted COVID-19 restrictions earlier in the year than expected. Although volumes do not increase, cargo revenues are above pre-pandemic levels. On the cost side, there is some relief. Jet fuel prices remained moderate in the first half of the year, although still high.”
Noting that the sector’s return to net profitability is seen as a great success, even with a net profit margin of 1.2%, Walsh said, “First of all, the sector’s operating with profitability in a period of economic uncertainties seems to be an important success. Second, the increase in net profit came after the biggest loss of $183.3 billion in aviation history in the 2020-2022 period. 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% for the period 2015-2019.”
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 absorb rising fuel costs. Even a net profit margin of 1.2% is a welcome development after deep COVID-19 losses. But in an environment where airlines earn an average of $2.25 per passenger, it will continue to be difficult for many airlines to repair damaged balance sheets and provide sustainable return on capital to investors.”
Source: Trthaber / Prepared by Irem Yildiz