Airlines Return to Profit in 2023

Airlines are back to profit in 2023, with expected net income of $23.3 billion, according to the International Air Transport Association (IATA), for a margin of 2.6%. For 2024, revenue is estimated to be $25.7 billion with a growth margin of 2.7%.

According to IATA, the sector has globally recovered very well from the crisis caused by Covid restrictions, but profits are stabilizing as continued growth is offset by high costs of capital. “It is wrong to talk about excess profits. Yes, there are companies that make excess profits, but the average increase in airfare prices is below the general consumer price index,” explained the association’s CEO Willie Walsh in an interview with the Italian economic newspaper Il Sole 24 Ore. “On average, the company will have a net profit of $5.44 per passenger this year and $5.45 in 2024.” Too little, in the manager’s opinion, to withstand any shock.

3.5% of GDP and more than 3 million people depend on this sector. However, the numbers are much more positive than expected: 23.3 versus 9.8 billion dollars. Total revenue will be $896 billion, up 6.9% from 2022, which is a record high that exceeds 2019’s $838 billion, while the record year for profits was 2017 with $37.6 billion.

Passenger numbers will grow by $4.7 billion in 2024, up from $4.5 billion in pre-Covid 2019; a return to “normality” is expected in the coming months, even in countries such as China, where traffic levels are still lower than before the pandemic.

Concerns about future profitability include the unknown price of oil, which could rise again due to global instability, a cost that accounts for about 30% of airlines’ operating expenses.

IATA also broke down expected net profits by geography: in 2023, North American airlines expect $14.3 billion, European airlines $7.7 billion, Middle Eastern airlines $2.6 billion, with further losses expected, albeit small, in Latin America (-$0.6 billion), Africa (-$0.5 billion), Asia-Pacific region (-$0.1 billion).