How much will airlines earn this year, according to IATA?

If the International Air Transport Association (IATA) forecasts do not come true, 2024 the year will once again be very positive for airlines as record revenue and profits that will be higher than 11% compared to those achieved last year, another year of historical records. Also during this year The number of travelers will exceed about 5 billion. However, the profitability of the airline industry remains highly dependent on developments in conflicts such as Ukraine and the Middle East, as well as supply chain problems

At the IATA annual meeting, which was attended by some 1,500 airline representatives from all over the world, president of the organization, Willie Walshwas optimistic about forecasts that during this year Record total revenue will be achieved – 918 billion euros, which is 9.7% more than in 2023.. However, in terms of net profit, although the records of 2018 and 2017 will not be broken, indicators will be achieved that are 11.3% higher than those of 2023 – 28.1 billion euros with a margin of 3%. Walsh said this is a “great achievement” given the “recent and profound losses caused by the pandemic.”

IATA forecasts are based on increased demand for passengersbecause airlines estimate that during this year 4.96 billion people travel by aira maximum exceeding both 2023 and pre-pandemic volumes.

The Achilles heel of profitability

Speaking at the 80th IATA Annual Meeting, Willie Walsh also emphasized the importance of enhancing airline profitability and improving their financial sustainability. In this regard, the IATA Director General noted that although the aviation sector is on the path to sustainable profits, “there is still a long way to go. The 5.7% return on invested capital is well below the cost of capital.” , which is more than 9%. And earning just $6.14 per passenger is an indication of how meager our income is, which in many parts of the world is barely enough to buy a cup of coffee.

Willie Walsh: “Freedom from a parade of burdensome regulations and ever-increasing tax proposals would also help. Focusing on public policies that make businesses more competitive would be a win for the economy, jobs and connections. It would also put us in a strong position to accelerate investment in sustainable development.”

Nevertheless, The expected amount will also be an improvement over the earnings forecast. $25.7 billion (2.7% net profit) by 2024, according to IATA data published in December 2023.

Expected that passenger revenues will reach $744 billion in 2024, up 15.2% from 2023, and operating profit will be $59.9 billion, up 14.7%.

As far as bets are concerned, it is assumed that the actual average cost of a round trip airfare in 2024 will be $252.s, which is significantly less than $306 in 2019. So the trend in available fares continues, even if the numbers are skewed somewhat by shorter travel distances due to the slower pace of recovery in some long-distance travel markets. The average load factor will be 82.5%, at pre-pandemic levels (82.6% in 2019).

Supply chain problems

Another challenge facing the aviation industry is the problem supply chain problems. On the one hand, they will mean a slowdown in the number of planned flights – 38.7 million, which is lower than the December estimate by 1.4 million. And, therefore, this also directly affects profitability.

The number of aircraft deliveries planned for 2024 is expected to be 1,583, down 11% from expectations released just a few months ago of 1,777 aircraft being added to the global fleet in 2024.

Other risks highlighted by IATA include the development of various military conflicts – in Ukraine, in the Middle East – as well as various regulations, especially those that could impact additional costs associated with passenger rights regimes, regional environmental initiatives and accessibility requirements.

By region

In 2024, all regions are expected to generate profits for the second year in a row, with the most significant growth coming from companies in the Asia-Pacific region.

Europe

Europe has a positive productivity outlook as Demand will remain strong in 2024. However, supply chain issues coupled with high interest rates and the risk of labor disputes could limit prospects for further profitability gains in the near term.

North America

Remains region that makes the largest contribution to sector profits, supported by high passenger load factors, stable profitability and strong consumer spending despite cost of living pressures. Passenger demand and a high load factor of 84% are expected to drive revenue growth and operating profitability in 2024. Canada has seen slower traffic growth and greater wage pressures than the U.S. market.

Pacific Asia

It is expected that the Asia-Pacific region will be responsible for half of global growth in 2024, which is largely due to the recovery of the domestic markets of China, Japan and Australia. There is still large pent-up demand for cross-border travel in the region, which is likely to boost growth prospects in the future.

Latin America

Latin America has experienced continuous improvement of financial results since 2020, although results were uneven across the region. The underperformance in financial performance is largely due to the economic and social unrest observed in some parts of the region. Central American countries, especially Mexico, El Salvador, Guatemala and Honduras, are key contributors to the region’s earnings growth.

Middle East

The Middle East benefits from the strength of both the region’s economies and its global centers. The United Arab Emirates continues to benefit from its attractiveness for leisure and business travelers. Meanwhile, huge Saudi Arabia Investments in infrastructure and tourism provide strong growth in passenger and cargo volumes. While airlines continue to add capacity, profitability remains strong and travel demand remains buoyant and looks set to continue to rise.

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