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The International Air Transport Association (IATA) said it expects the airline industry to push into the black in 2023, moving into a post-pandemic normal.
The trade association anticipates $4.7B in net profits for 2023, up from $6.9B in losses in 2022 and jumping to a profit for the first time since 2019. The loss in 2022 is nonetheless a significant improvement from the stark losses of $42B and $137.7B in 2021 and 2020, respectively. The North American market is the only region expected to swing to a profit in 2022.
“Resilience has been the hallmark for airlines in the COVID-19 crisis. As we look to 2023, the financial recovery will take shape with a first industry profit since 2019. That is a great achievement considering the scale of the financial and economic damage caused by government imposed pandemic restrictions,” IATA Director General Willie Walsh said. “But a $4.7B profit on industry revenues of $779B also illustrates that there is much more ground to cover to put the global industry on a solid financial footing.”
He cited “onerous regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed” among the key issues constraining profitability. In terms of the high costs, surging jet fuel costs were top of mind for Walsh.
Still, a reopening in China and resilient travel demand in North America after the pandemic restricted travel plans is expected to buoy the industry against elevated costs. Specifically, the group anticipates a relaxation of Zero-COVID rules by the second half of 2023 in its prognostications. With solid demand across the globe, the industry is anticipated to maneuver more effectively toward profit improvements.
“The challenges that airlines will face in 2023, while complex, will fall into our areas of experience. The industry has built a great capability to adjust to fluctuations in the economy, major cost items like fuel prices, and passenger preference,” Walsh concluded. “We see this demonstrated in the decade of strengthening profitability following the 2008 Global Financial Crisis and ending with the pandemic. And encouragingly, there are plenty of jobs and the majority of people are confident to travel even with an uncertain economic outlook.”
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Image and article originally from seekingalpha.com. Read the original article here.