Airlines will return to profitability in 2023 after three-year slump: IATA

IATA: 2023 Airline passenger numbers will exceed 4 billion

The global airline industry is set to return to profitability again next year following a near-three year downturn fueled by the Covid-19 pandemic, an industry body said Tuesday.

The International Air Transport Association (IATA) said it expects the industry to post a “small” net profit of $4.7 billion in 2023, with more than 4 billion passengers set to take to the skies.

Director General Willie Walsh told CNBC the predictions marked a “step in the right direction” for an industry clobbered by pandemic-induced travel restrictions and resultant staff shortages.

“The recovery is going well,” Walsh told CNBC’s Julianna Tatelbaum. “[There’s] still a long way to go to get back to where we were in 2019, but we are heading in the right direction.”

The forecasted uplift, outlined in a new report, points to the first profitable year for the airline business since 2019, when net profits were $26.4 billion, and signal an improvement on the association’s June outlook, when it said profitability was “within reach.”

For 2022, IATA also reduced its forecast for industry-wide losses to $6.9 billion from $9.7 billion in June’s outlook.

Challenges ahead ‘relatively small’

Travel disruption set to ease

Cargo markets, meanwhile — which became a source of life support for airlines during the pandemic — will continue to account for a sizeable share of revenues in 2023, albeit at a lower level than recent years.

“Revenues are expected to be $149.4 billion, which is $52 billion less than 2022 but still $48.6 billion stronger than 2019,” according to the report.

The report also noted that higher costs relating to energy prices and labor, skill and capacity shortages will continue to weigh on revenues but at a lower level.

The forecasts follow a chaotic year for air travel, with flight cancellations, delays and staff walkouts commonplace at many major airports. However, Walsh said he thinks most of that disruption is now over, and passengers should expect a smoother travel experience going forward.

“I think most of that is behind us,” said Walsh. “We should be confident that those issues have been resolved. Certainly there is absolutely no excuse for the airports not to deliver on good service as we go into 2023.”

Source: https://www.cnbc.com/2022/12/06/airlines-will-return-to-profitability-in-2023-after-three-year-slump-iata.html