The global airline industry is expecting to return to profit in 2023 after substantially cutting its collective financial losses this year, according to the latest data from the International Air Transport Association (IATA).
Airlines are expected to make a net loss of $6.9 billion in 2022, which compares to massive deficits of $42 billion in 2021 and $137.7 billion in 2020 during the height of the Covid-19 pandemic.
Next year, IATA is projecting a “small” net profit for the global airline sector of $4.7 billion, which would be the first profit since 2019 when the industry made a net income of $26.4 billion.
European airlines are expected to lose $3.1 billion collectively in 2022 and then return to a profit of $621 million next year. IATA is predicting passenger growth in Europe of 8.9 per cent in 2023 compared with this year and for demand to reach around 89 per cent of pre-Covid levels.
“The war in Ukraine has curtailed the activities of some of the region’s carriers,” said IATA. “Operational disruptions at some of the continent’s hubs are being resolved, but labour unrest continues at various locations.”
Airlines have seen their financial prospects improve during 2022 through “strengthened yields and strong cost control in the face of rising fuel prices”.
Willie Walsh, IATA’s director general, said: “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.
“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 regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed.”
Walsh added that despite economic “uncertainties”, the industry should benefit from lower oil price increases and continued “pent-up” demand next year. Although the sector, as a whole, was only likely to achieve a “razor thin” profit in 2023.