Airlines report ‘billion-dollar losses’ this year; profit returns in 2023: IATA

According to the International Air Transport Association (IATA), the global airline sector may post an estimated $6.9 billion loss this year. This is much less than the loss reported in 2020 and 2021 and is lower than earlier projections. The global airlines’ organisation also anticipates a modest overall profit for the sector in 2020, which is a first since 2019.

Notably, the loss forecast for 2022 has decreased from $9.7 billion in June to $6.9 billion on Tuesday, which the IATA has ascribed to an increase in passengers and cost-cutting by airlines amid an increase in fuel costs. With almost four billion people expected to travel in 2023, they also forecast a modest industry profit of $4.7 billion.

IATA Director-General Willie Walsh praised the predicted profit, calling it ‘a fantastic success’ in light of the extent of the financial and economic harm inflicted by government-imposed pandemic restrictions. Following the COVID-19 epidemic in 2020 and 2021, the worldwide aviation sector suffered significant losses. The global alliance of at least 290 airlines, which accounts for roughly 89% of all air traffic worldwide, has also issued a warning about how fragile this rebound is given the possibility that certain airlines may still face difficulties with government rules, expenses and policies.

‘Everyone needs to be aware of how delicate the recovery is, and this is crucial. Yes, we are rebounding; yes, the momentum is strengthening; and yes, we anticipate it to keep strengthening in 2023’, according to Walsh. IATA estimates that although passenger revenues might rise to $438 billion, overall passenger yields are anticipated to climb by 8.4%.

The Asia Pacific region has suffered significantly as a result of China’s zero-Covid policy and its effects on travel, according to the IATA, and in 2023, the estimated 59.8% increase in passenger demand is anticipated to outpace the growth of 47.8% in capacity. The profitability of airlines for the following year may be impacted if Beijing does not loosen restrictions, it was added. The IATA warned that some economies could experience a recession, which would cast doubt on the slightly optimistic outlook for 2023. Notably, the global airline sector reported a $42 billion loss in 2021 and a $137.7 billion loss in 2020.