IATA expects global airlines to post $6.9 billion in losses in 2022, razor-thin profits in 2023

Since 2019, globally, airlines have reported net losses due to suspension of flight services and restrictions due to the onset of the COVID pandemic. Airlines around the world are projected to lose $42 billion and $137 billion in 2021 and 2020, respectively.

IATA expects airlines to post a global net profit of $4.7 billion in 2023 on revenue of $779 billion with a 0.6% net margin.

Passenger demand is expected to reach 85.5% of 2019 levels during 2023, but passenger yields are expected to decrease by 1.7%. With economic uncertainty, cargo volumes are expected to decline to 57.7 million tonnes in 2021 from a peak of 65.6 million tonnes. IATA expects cargo yields to decline by 22.6%, mostly in the second half of the year. Cargo yields increase to 52.5% in 2020, 24.2% in 2021 and 7.2% in 2022.

IATA expects total fuel spending for 2023 to be $229 billion, assuming Brent crude at $92.3 a barrel and jet kerosene at $111.9 a barrel, taking into account the relative stabilization of fuel supplies following the initial disruptions from the war in Ukraine Happened. Jet kerosene is estimated at $138.8/barrel for 2022.

IATA cautioned that the outlook expects a gradual reopening of China to international traffic and a gradual easing of domestic COVID-19 restrictions from the second half of 2023.

“Each passenger is expected to contribute an average of $1.11 to the net profit of the industry. In most parts of the world this is much less than the amount needed to buy a cup of coffee. Airlines should be mindful of any increase in taxes or infrastructure fees,” Walsh said.

For 2022, IATA has cut the net loss forecast to $6.9 billion from the $9.7 billion it expected for the next year, according to its June 2022 outlook. Improvement is expected in the current year on the back of stronger cost control by airlines in view of better yields and rising fuel prices.

According to IATA, passenger earnings for the global airline industry are expected to increase by 8.4% and passenger revenue for the current year is projected to increase to $438 billion. Air cargo, which has emerged as a saving grace for airlines in the face of declining passenger revenue, is expected to continue with its strong performance at $201.4 billion in revenue, almost double the $100.8 billion it earned in 2019 . Revenue levels at $727 billion, up 44% over 2021. Cost pressures for the sector remain due to shortages of labour, infrastructure, skills and capacity.

For the next year, the airline industry is expected to grow in profitability, but it will be led primarily by airlines in North America, followed by Europe and the Middle East.

“Without question the recovery is strong and has accelerated. IATA Director General Willie Walsh said, “The impact that is happening on China and Asia is an exception to this.”

He said that Covid is now clearly endemic, with the exception of China, most countries have now relaxed travel restrictions related to Covid.

IATA represents approximately 290 airlines, which comprise 89% of global air traffic.

“We will end the year at approximately 70% of 2019 passenger volumes. But with yield improvements in both the cargo and passenger businesses, airlines will reach the pinnacle of profitability,” Walsh said.