Iata expects a return to profitability for the global airline industry in 2023 as airlines continue to cut losses stemming from the effects of the Covid-19 pandemic in 2022.
Airlines are expected to post a small nett profit next year of $4.7 billion (R82bn) – a 0.6% nett profit margin. It is the first profit since 2019, when industry nett profits were $26.4bn (R460.6bn), a 3.1% nett profit margin.
By the end of 2022, airline nett losses are expected to be $6.9bn (R120.39bn), an improvement on the $9.7bn (R169.24bn) loss for 2022 in Iata’s June outlook. This is significantly better than the losses of $42bn (R732.79bn) and $137.7bn (R2.4trn) realised in 2021 and 2020 respectively.
“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,” says Willie Walsh, Iata DG.
Next year, passenger numbers are expected to surpass the four billion mark for the first time since 2019.
“There is much more ground to cover to put the global industry on a solid financial footing. Many airlines are sufficiently profitable to attract the capital needed to drive the industry forward as it decarbonises. But many others are struggling for a variety of reasons. These include onerous regulations, high costs, inconsistent government policies, inefficient infrastructure, and a value chain where the rewards of connecting the world are not equitably distributed,” Walsh adds.
Improved prospects for 2022 stem largely from strong cost control in the face of rising fuel prices and strengthened RPKs, expected to grow to $438bn (R7.65trn) by year end (up from $239bn (R4.17trn) in 2021).
Air cargo played a key role in cutting losses as well, with revenues expected to reach $201.4bn (R3.5trn). That is an improvement compared with the June forecast, largely unchanged from 2021, and more than double the $100.8bn (R1.76trn) earned in 2019.
Overall revenues are expected to grow by 43.6% compared with 2021, reaching an estimated $727bn (R12.7trn).
“That airlines were able to cut their losses in 2022 in the face of rising costs, labour shortages, strikes, operational disruptions in many key hubs, and growing economic uncertainty, speaks volumes about people’s desire and need for connectivity,” Walsh says.
“With some key markets like China retaining restrictions for longer than anticipated, passenger numbers fell somewhat short of expectation. We’ll end the year at 70% of 2019 passenger volumes. The expected profits for 2023 are razor thin, but it is incredibly significant that we have turned the corner to profitability.”
African carriers are expected to post a loss of $638 million (R11.14bn) altogether in 2022, narrowing to a loss of $213m (R3.72bn) in 2023. Over the year, the region is expected to serve 86.3% of pre-crisis demand levels with 83.9% of pre-crisis capacity.
– Travel News
