Airlines will fly back to profit in 2023 says IATA

The airline industry will return to profit next year as pent-up demand for travel sustains bookings even as the global economy tightens, the International Air Transport Association trade group predicted.

Losses this year are likely to total US$9.7 billion (HK$75.66 billion) as air travel begins its recovery from the coronavirus crisis, IATA said yesterday in an update at its annual meeting in Doha, an improvement on the US$11.6 billion deficit predicted at the previous gathering last October.

"Industry-wide profit should be on the horizon in 2023," IATA director general Willie Walsh told the gathering of airline chiefs. "We are rebounding. By next year, most markets should see traffic reach or exceed pre-pandemic levels."

While most carriers are enjoying bumper sales as customers flood back following the lifting of Covid curbs, taking leisure trips and catching up with friends and family, there are doubts about how long the surge will continue as high fuel prices push airlines to hike fares and inflationary pressures weigh on household spending.

Walsh said that while "there is no way to sugar coat the bitter economic and political realities," at the same time "the desire to travel and the necessity of moving goods are both solid."

The return to profit is already underway in North America, with airlines there now expected to post a collective net income of US$8.8 billion this year. While all other regions will still make a loss, passenger numbers worldwide are forecast to reach 83 percent of pre-pandemic levels.

The industry has emerged "leaner, tougher, and nimble," having defied predictions for widespread bankruptcies and failures, Walsh said. The situation was helped by the industry having enjoyed its best-ever run of profits prior to the pandemic, though fixing balance sheets carrying debts of $650 billion remains a "monumental challenge," he said.

IATA also said that 2021's loss amounted to US$42 billion, better than the US$52 billion shortfall previously envisioned and far lower than the record US$138 billion loss suffered by the industry in 2020, when Covid-19 grounded flights worldwide.