December 06, 2022

IATA: Global Airline Industry Will Be Back in the Black in 2023

The global airline industry will return to profitability in 2023, according to the latest IATA economic forecast.

The trade group foresees airlines globally recording a profit of $4.7 billion next year on revenues of $779 billion. That would mean a net margin of just 0.6% as global demand reaches 85.5% of the 2019 level despite a considerable drag from China's restrictive Covid policies.

"Despite the economic uncertainties, there are plenty of reasons to be optimistic about 2023," IATA director general Willie Walsh said in a prepared statement. "Lower oil price inflation and continuing pent-up demand should help to keep costs in check as the strong growth trend continues. At the same time, with such thin margins, even an insignificant shift in any one of these variables has the potential to shift the balance into negative territory. Vigilance and flexibility will be key."

IATA has also issued an improved forecast for global airline industry results in 2022. According to the projection, the industry will lose $6.9 billion this year on revenues of $727 billion. That bottom-line estimate represents an upgrade from IATA's most recent forecast, released in June, which projected global airline losses of $9.7 billion this year. Higher than expected prices made up for headwinds from a slowing globally economy and high fuel prices, IATA said. Demand for 2022 will be 70.6% of prepandemic levels.

North American carriers continue to soar
In North America, airlines continue to perform better than airlines on a global level. North American carriers will boost profits from a projected $9.9 billion this year to an estimated $11.4 billion next year.

IATA projects that in 2023 passenger demand growth of 6.4% will outpace capacity growth of 5.5%. For the year, the region is expected to serve 97.2% of pre-crisis demand levels with 98.9% of pre-crisis capacity.

"Carriers in the region benefitted from fewer and shorter-lasting travel restrictions than many other countries and regions," IATA said. "This boosted the large U.S. domestic market, as well as international travel, notably across the Atlantic."

Copyright 2022 Northstar Travel Media, LLC. All rights reserved. From By Robert Silk.

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