Airline Industry Leaves Covid Turbulences Behind

Having left behind most Covid-related turbulences, the global airline industry emerged from the storm in 2023, returning to profitability after three years of deep losses. According to the latest estimate from the International Air Transport Association (IATA), commercial airlines ended 2023 with a net profit of $27.4 billion, up from a loss of $3.5 billion in 2022 and significantly higher than previously expected. Back in December, IATA had predicted 2023 profits to come in around $23 billion.

Speaking at the IATA's 80th Annual General Meeting in Dubai on Monday, IATA's Director General Willie Walsh hailed the industry's successful recovery from the pandemic, while also warning that the industry's profit margins remain "wafer thin." "We deserve to celebrate the hard work that has brought our industry back from the brink, while acknowledging that we remain squeezed between a fiercely competitive environment downstream and the oligopolistic upstream supply chain’s lack of competition," Walsh said, adding that "onerous regulation" and persistent supply chain problems also stand in the way of sustainable industry-level profits.

Looking ahead, the IATA expects industry revenues to reach a historic high of $996 billion in 2024, as 38.7 million flights are expected for the year, just 0.2 million short of the 2019 supply. Passenger revenue is expected to reach $744 billion, exceeding the 2019 total by more than 22 percent, driven in part by an increase in in passenger volume and in part by improvements in passenger yields. Net profits are expected to climb to $30.5 billion this year, which is more than previously forecast but still not enough to build financial resilience and invest in a more sustainable future, according to Walsh. “The airline industry is on the path to sustainable profits, but there is a big gap still to cover. A 5.7 percent return on invested capital is well below the cost of capital, which is over 9 percent. And earning just $6.14 per passenger is an indication of just how thin our profits are - barely enough for a coffee in many parts of the world."