Global airline industry to report billions in losses this year; may return to profit in 2023: IATA

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The global airline industry may report an estimated $6.9 billion in loss this year, said the International Air Transport Association (IATA), which is lower than previous estimates and significantly lesser than the loss reported in 2020 and 2021. In a first since 2019, the global airlines’ body also expects a small industry-wide profit for the upcoming year. 

Notably, the loss estimated for 2022 has been reduced from $9.7 billion in June to $6.9, on Tuesday, which the IATA has attributed to an increased number of passengers and cost control by airlines amid a rise in fuel prices. Furthermore, they also expect a small industry-wide profit of $4.7 billion in 2023 with more than four billion passengers set to fly. 

“That is a great achievement considering the scale of the financial and economic damage caused by government-imposed pandemic restrictions,” said the IATA Director-General Willie Walsh referring to the projected profit. This comes after the global airline industry reported massive losses in 2020 and 2021 due to the COVID-19 pandemic. 

The global grouping of at least 290 airlines across the world, accounting for nearly 89 per cent of global air traffic, has also warned about how fragile this recovery is given that some airlines might continue to struggle with regulations, high costs and government policies. 

“It’s very important that everybody understands just how fragile the recovery is. Yes we are recovering; yes the momentum is improving; yes, we expect it to continue to improve in 2023” said Walsh. According to the IATA, the overall passenger yields are expected to grow by 8.4 per cent while the passenger revenues may increase to $438 billion.

In 2023, the passenger demand which is an estimated 59.8 per cent is expected to surpass the capacity growth of 47.8 per cent, said the IATA referring to the Asia Pacific region which has witnessed a significant setback due to China’s zero-Covid policy and its impact on travel. 

It added that if Beijing does not ease restrictions it could affect airlines’ profitability for the upcoming year. However, another risk looming over the slightly positive outlook for 2023 may be the risk of some economies falling into recession, said the IATA. Notably, in 2021 the global airlines’ industry reported a loss of $42 billion and a $137.7 billion loss in 2020. 

(With inputs from agencies) 

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