The International Air Transport Association (IATA) has revised its airline profitability projections, expecting a strengthened outlook in 2023 and a stabilization in 2024. Despite this, global net profitability will remain notably below the cost of capital for both years, with significant regional variations in financial performance persisting.
Highlights from the forecast include:
- Anticipated airline industry net profits of $25.7 billion in 2024, slightly up from $23.3 billion in 2023.
- Return on invested capital is expected to lag behind the cost of capital by 4 percentage points in both years due to rising global interest rates.
- Operating profits are forecasted to increase to $49.3 billion in 2024 from $40.7 billion in 2023.
- Projected revenues in 2024 are set to reach $964 billion, with expenses totalling $914 billion.
- Travel is expected to hit an all-time high in 2024, surpassing pre-pandemic levels, with an estimated 4.7 billion travellers.
- Cargo volumes are predicted to be 58 million tonnes in 2023 and 61 million tonnes in 2024.
Willie Walsh, IATA’s Director General, acknowledged the industry’s resilience but highlighted concerns about the low net profit margin of 2.7%, which is insufficient for the sector’s long-term sustainability. He emphasized the industry’s need to address regulatory challenges, high costs, and oligopolies in the supply chain.
The outlook factors:
- Predicted revenue growth exceeding expenses, strengthening profitability.
- Industry revenues are expected to reach $964 billion in 2024, supported by an estimated 40.1 million flights, surpassing pre-pandemic levels.
- Continued challenges include the gap between revenue and expenses, despite rising operating profits.
In conclusion, while the aviation industry shows signs of recovery, challenges persist in achieving sustainable profitability due to various ongoing factors and cost pressures.
