A record number of passengers boarded planes on Monday, leading global airlines to increase their profit prediction for 2024. Consequently, they forecasted industry-wide revenues just short of $1 trillion.
The International Air Transport Association (IATA) stated that despite recent strikes, it anticipates the global aviation sector will earn a profit of $30.5 billion this year. This marks an increase from the upwardly revised $27.4 billion in 2023.
That surpasses the $25.7 billion projection for 2024 released in December. Notably, this occurs only four years after the sector fell to a $140 billion loss in 2020 due to the epidemic.
Director General Willie Walsh told Reuters, “The environment is better than we had expected, particularly in Asia.” This statement was made on the fringes of an annual gathering of IATA’s more than 300 members, which collectively handle over 80% of the world’s air traffic.
The airline sector cautioned that disruptions to global supply chains, including deliveries of its own fleets, impede its capacity to meet a robust increase in travel demand. However, global airlines raised their 2024 profit outlook as travel soars.
According to IATA’s twice-yearly economic outlook, passenger yields, or the average price a passenger pays to fly one mile, are predicted to increase by 3.2% from 2023. This is partially due to limited capacity growth, which raises average fares.
In contrast, cargo is anticipated to decrease by 17.5% in 2024 as freight markets resume their regular patterns following their peak during the epidemic.
Many people view airline activity as a barometer for commerce, consumer and corporate confidence, and both.
The sector is still fragmented because of high fixed costs and laws that deter most cross-border acquisitions.
“The margin remains wafer thin; we’re still looking at a margin of just over 3%,” said Walsh. “(That) performance is still well below where the industry needs to be.”
Despite China’s slow rebound in international travel, IATA more than tripled its industry profit prediction for 2024 to $2.2 billion in Asia.
North America continues to be the most profitable region with “strong consumer spending despite cost-of-living pressure,” according to IATA, with $14.9 billion, unchanged from earlier projections.
According to IATA, unexpected maintenance problems have affected airlines. That seemed to be a reference to Pratt & Whitney engine repair bottlenecks, which are predicted to halt hundreds of Airbus aircraft this summer.
On Friday, industry insiders reported that Airbus, the world’s largest aircraft manufacturer, faced a fresh wave of supply issues. These concerns are raising doubts about projected second-half production. According to the planemaker, it will adhere to its full-year delivery targets.
Following a mid-air cabin panel explosion in January that led US authorities to impose a production cap, rival Boeing is building considerably fewer of its popular 737 MAX aircraft than it had anticipated. This setback has prompted adjustments in their production plans and expectations.
The Indian airline IndiGo will host the 2025 IATA annual general meeting in Delhi, India, the organization said on Monday.
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