A return to airline industry profitability is “on the horizon” for next year despite ongoing challenges, Iata forecast today.
Industry losses this year are expected to reduce to $9.7 billion, improved from the October 2021 forecast for an $11.6 billion loss.
The association suggested industry-wide profitability in 2023 “appears within reach” amid recovery from the pandemic, with North America already expected to deliver an $8.8 billion profit this year.
However, the outlook assumes that the war in Ukraine will not escalate beyond its borders.
“Among the many negative impacts of an escalation for aviation, rising fuel costs and a dampening demand due to lowered consumer sentiment would be paramount,” Iata cautioned.
Efficiency gains and improving yields are helping airlines to reduce losses even with rising labour and fuel costs.
Iata said: “Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fuelling a resurgence in demand that will see passenger numbers reach 83% of pre-pandemic levels in 2022.”
Director general Willie Walsh, speaking at the opening of the Iata annual meeting in Doha, Qatar, said: “Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty.
“Losses will be cut to $9.7 billion this year and profitability is on the horizon for 2023.
“It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets.”
Revenues are rising as Covid-19 restrictions ease and people return to travel. But challenge for 2022 is to keep costs under control.
Walsh added: “The reduction in losses is the result of hard work to keep costs under control as the industry ramps up.
“The improvement in the financial outlook comes from holding costs to a 44% increase while revenues increased 55%.
“As the industry returns to more normal levels of production and with high fuel costs likely to stay for a while, profitability will depend on continued cost control.
“And that encompasses the value chain. Our suppliers, including airports and air navigation service providers, need to be as focused on controlling costs as their customers.
“Governments must have learned their lessons from the Covid-19 crisis. Border closures create economic pain but deliver little in terms of controlling the spread of the virus.
“With high levels of population immunity, advanced treatment methods, and surveillance procedures, the risks of Covid-19 can be managed.
“At present, there are no circumstances where the human and economic costs of further Covid-19 border closures could be justified.”