Airlines to Return to Profit in 2023 – IATA

Even though the road to recovery is still long, turning the corner towards profitability is a significant feat considering the scale of the financial and economic damage caused by the pandemic

BY AYUSHEE CHAUDHARY

The airlines have survived the COVID-19 crisis donning the badge of resilience. 2022 almost became synonymous with a comeback for the industry as travel restarted. Building on that, financial recovery for the airlines is expected in 2023, further making way for the first industry profit since 2019. That is a significant feat considering the scale of the financial and economic damage caused by the pandemic. However, the road to recovery is still long. “Many airlines are sufficiently profitable to attract the capital needed to drive the industry forward but many others are struggling for various reasons. These include inconvenient regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed,” said Willie Walsh, Director General of the International Air Transport Association (IATA).

In 2023 IATA expects the airline industry to tip into profitability. Airlines are anticipated to earn a global net profit of $4.7 billion on revenues of $779 billion (0.6 per cent net margin) in spite of growing economic uncertainties as global GDP growth slows to 1.3 per cent (from 2.9 per cent in 2022). “Despite the economic uncertainties, there are plenty of reasons to be optimistic about 2023. 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,” Walsh added.

The main drivers of this profit identified by IATA include: y Passengers: The passenger business is expected to generate revenues of $522 billion as passenger demand is expected to reach 85.5 per cent of 2019 levels over the course of 2023. Despite the uncertainties of China’s Zero COVID policies, which are constraining both domestic and international markets, passenger numbers are expected to surpass the four billion mark for the first time since 2019, with 4.2 billion travellers expected to fly. Passengers are taking advantage of the return of their freedom to travel. A recent IATA poll of travellers in 11 global markets revealed that nearly 70 per cent are traveling as much or more than they did prior to the pandemic. And, while the economic situation is concerning to 85 per cent of

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