In its updated outlook for 2023, the International Air Transport Association (IATA) forecasts a stronger financial performance for the airline industry.
The industry’s net profits are anticipated to reach $9.8 billion, more than double the previous estimate of $4.7 billion, while operating profits are expected to climb to $22.4 billion. Both figures represent significant improvements over 2022’s performance.
The number of air passengers is projected to rise to 4.35 billion in 2023, nearing the pre-pandemic figure of 4.54 billion in 2019. However, cargo volumes may drop to 57.8 million tonnes due to a slowdown in international trade volumes.
Total revenues are set to grow 9.7% year-over-year, exceeding $800 billion for the first time since 2019. The growth in revenues (9.7%) is expected to outpace the increase in expenses (8.1%), contributing to increased profitability.
IATA Director General, Willie Walsh, attributed the improved financial performance to several factors, including the earlier-than-expected lifting of COVID-19 restrictions in China and moderate jet fuel prices.
He also acknowledged the industry’s resilience despite the record net losses of $183.3 billion from 2020 to 2022, adding that challenges remain in mending damaged balance sheets and providing sustainable returns to investors.
The IATA report also outlined various potential risks to the industry’s profitability, including inflation rates, geopolitical tensions, supply chain disruptions, and regulatory costs.
The report noted regional diversity in financial performance. While the global airline industry is expected to return to profitability, not all regions are predicted to post a profit.
North America is currently the strongest performer, with European carriers following suit. Asia-Pacific carriers are expected to see substantial improvements, while carriers in the Middle East, Latin America, and Africa face unique challenges hindering their recovery.
In his closing remarks, Walsh emphasized the industry’s resilience and stressed the importance of sustainable, efficient, and profitable connectivity. He also underlined the importance of passenger satisfaction, with a recent IATA poll revealing that 81% of respondents appreciated the freedom provided by air travel more after the pandemic.