IATA Reports: Global Airlines Raise Profit Forecast for 2024 Amid Record Travel Demand
Global airlines on Monday June 3 raised their profit forecast for 2024 and projected industry-wide revenues just shy of $1 trillion, driven by a record number of travelers boarding flights.
The International Air Transport Association (IATA) announced that the worldwide industry is expected to generate $30.5 billion in profit this year, surpassing the upwardly revised $27.4 billion in 2023. This is attributed to carriers maintaining control over underlying labor costs despite recent strikes. The new forecast is a significant recovery from the $140 billion loss in 2020 due to the pandemic and exceeds the $25.7 billion forecast for 2024 issued in December.
“The environment is better than we had expected, particularly in Asia,” Director General Willie Walsh told Reuters on the sidelines of IATA’s annual meeting, which includes over 300 members accounting for more than 80% of global air traffic.
However, the airline industry cautioned that its ability to meet the strong rebound in travel demand is being hindered by global supply chain disruptions, including delays in fleet deliveries.
Passenger yields, or the average amount paid by a passenger to fly one mile, are expected to increase by 3.2% compared to 2023, according to IATA’s twice-yearly economic outlook. This rise is partly due to constrained capacity growth, which drives up average fares. Conversely, cargo yields are expected to fall by 17.5% in 2024 as freight markets normalize after the pandemic boom.
Airline activity is often seen as an indicator of business and consumer confidence, as well as trade health. Despite this, the industry remains fragmented due to high fixed costs and regulations that discourage most cross-border mergers.
“The margin remains wafer thin; we’re still looking at a margin of just over 3%,” Walsh said. “That performance is still well below where the industry needs to be.”
In Asia, IATA more than tripled its industry profit forecast for 2024 to $2.2 billion, despite a sluggish recovery in international travel in China. North America remains the most profitable region, with profits expected to remain at $14.9 billion, supported by “strong consumer spending despite cost-of-living pressures.”
IATA noted that airlines have been affected by unforeseen maintenance issues, likely referencing repair bottlenecks for Pratt & Whitney engines, which are expected to leave hundreds of Airbus jets grounded this summer.
Industry sources indicated that Airbus, the world’s largest planemaker, is facing a new surge in supply problems, casting doubt on its output plans for the second half of the year. Despite these issues, Airbus has maintained its full-year delivery goals. Rival Boeing is producing far fewer of its best-selling 737 MAX jets than originally planned after a mid-air cabin panel blowout in January led U.S. regulators to cap its production.
Related news: https://airguide.info/category/air-travel-business/airline-finance/
Sources: AirGuide Business airguide.info, bing.com, finance.yahoo.com