Airlines To Record Strong Growth In Profit, Revenues Ahead: IATA

Airlines across the globe will record higher profit and revenues this year and in 2024 amid growing demand, according to the International Air Transport Association or IATA.

Revenues in 2024 are expected to rise faster than expenses, strengthening profitability.

Meanwhile, net profitability at the global level would be well below the cost of capital in both years, and it is likely to be hit by higher interest rates.

Willie Walsh, IATA’s Director General, noted that the speed of the recovery has been extraordinary, yet it also appears that the pandemic has cost aviation about four years of growth.

The trade body said results in 2024 would largely stabilize in 2024 reflecting the tight supply and demand conditions.

Around 4.7 billion people are expected to travel in 2024, exceeding the pre-pandemic level of 4.5 billion recorded in 2019.

An inventory of 40.1 million flights would be available in 2024, exceeding the 36.8 million flights expected in 2023, and 2019’s recorded level of 38.9 million.

The high demand for travel coupled with limited capacity due to persistent supply chain issues continues to create supply and demand conditions supporting yield growth, it said.

At the regional level, North America, Europe and the Middle East are expected to post net profits in 2023, while Asia Pacific is expected to join the group in 2024. IATA expects Latin America and Africa to be in the red in 2024.

Walsh added, “Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience. People love to travel and that has helped airlines to come roaring back to pre-pandemic levels of connectivity. From 2024 the outlook indicates that we can expect more normal growth patterns for both passenger and cargo.”

For fiscal 2023, airline industry net profits are expected to reach $23.3 billion, more than double what the trade body expected in June, and $25.7 billion in 2024. Net profit margin would be 2.6 percent this year, and 2.7 percent next year.

Airline industry operating profits are expected to increase 21.1 percent to $49.3 billion in 2024 from $40.7 billion in 2023. Expense growth is expected to be slightly lower at 6.9 percent for a total of $914 billion.

Total revenues in 2024 are expected to grow 7.6 percent year over year to $964 billion.

Passenger revenues would reach $717 billion in 2024, up 12 percent from $642 billion in 2023. Revenue passenger kilometers or RPKs growth is expected to be 9.8 percent year on year.

Load factor is expected to be 82.6 percent in 2024, slightly better than 2023’s 82 percent, and the same as in 2019.

Passenger yields in 2024 are expected to improve by 1.8 percent compared to 2023.

Cargo revenues are expected to fall to $111 billion in 2024, and cargo volumes are expected to be 58 million tonnes in 2023 and 61 million tonnes in 2024.

Return on invested capital in both 2023 and 2024 will lag the cost of capital by 4 percentage points, IATA noted. The interest rates around the world have risen in response to the sharp inflationary impulse.

As per IATA’s November 2023 passenger polling data, a third of travelers polled say they are traveling more than they did pre-pandemic, while some 49 percent indicate that their travel habits are now similar to pre-pandemic.

Looking ahead, 44 percent plans to travel more in the next 12 months than in the previous 12 months, while 48 percent expect to maintain similar levels of travel.

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