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661277
Tue, 06/06/2023 - 05:40
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Airline Industry Net Profit to Reach US$9.8 Billion In 2023

From Siti Radziah Hamzah

ISTANBUL, June 6 (Bernama) -- Airline industry net profit is expected to reach US$9.8 billion in 2023 with a 1.2 per cent margin, which is more than double the previous forecast of US$4.7 billion made in December 2022, said the International Air Transport Association (IATA) on Monday (US$1 = RM4.57).

It said profitability is estimated to strengthen in 2023, driven by positive developments including increasing travel demand. 

IATA director-general Willie Walsh said this year’s financial performances are also beating expectations.

"The stronger profitability is supported by several positive developments. China lifted COVID-19 restrictions earlier than anticipated. Cargo revenues remain above pre-pandemic levels even though volumes have not. And on the cost side, there is some relief. Jet fuel prices, although still high, have moderated over the first half of the year,” Walsh said in a statement Monday.

Total revenue is expected to grow 9.7 per cent year-on-year to US$803 billion, the first time revenue is topping the US$800 billion mark since 2019’s US$838 billion. 

IATA said passenger revenue is expected to reach US$546 billion (+27 per cent in 2022, -10 per cent in 2019.)

With COVID-19 restrictions now removed in all major markets, the industry is expected to reach 87.8 per cent of 2019 level of revenue passenger per kilometer for the year with stronger passenger traffic as the year progresses, it added.

IATA said the high demand for travel in many markets is keeping yields strong with a modest 1.1 per cent decline expected in 2023 compared to 2022, following increases of 9.8 per cent in 2022 and 3.7 per cent in 2021.

For 2023, expense growth is expected to be contained with an 8.1 per cent annual increase, said IATA. 

It noted that jet fuel costs are expected to average at US$98.50 per barrel with a total fuel bill of US$215 billion, cheaper than the US$111.90 per barrel previously expected in December 2022 and the average cost of US$135.60 per barrel in 2022. 

The industry’s operating profits are expected to reach US$22.4 billion in 2023, more than double the US$10.1 billion operating profit estimated in 2022. 

Some 4.35 billion people are expected to travel in 2023, which is close to the 4.54 billion who flew in 2019.

Walsh said economic uncertainties have not dampened the desire to travel, even as ticket prices absorbed elevated fuel costs. 

"After deep COVID-19 losses, even a net profit margin of 1.2 per cent is something to celebrate. But with airlines just making US$2.25 per passenger on average, repairing damaged balance sheets and providing investors with sustainable returns on their capital will continue to be a challenge for many airlines,” he added. 

-- BERNAMA


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