Written by Tim Heffer and Lisa Barrington
DUBAI (Reuters) – Global airlines on Monday raised their 2024 profit forecasts and projected industry-wide revenues of just under $1 trillion as the number of passengers on flights rose to a record high.
The International Air Transport Association (IATA) said it expects the global industry to make profits of $30.5 billion this year, higher than the upwardly revised $27.4 billion in 2023, as carriers keep a lid on essential labor costs despite recent strikes.
This comes just four years after the industry collapsed to a loss of $140 billion in 2020 as a result of the pandemic, which is higher than the $25.7 billion forecast for 2024 issued in December.
“The environment is better than we expected, especially in Asia,” Director General Willie Walsh told Reuters on the sidelines of the annual meeting of the International Air Transport Association, which includes more than 300 members representing more than 80 percent of global air traffic.
However, the airline industry has warned that its ability to serve a strong rebound in travel demand is hampered by disruption to global supply chains, including the delivery of its own fleets.
Passenger revenues – or the average amount a passenger pays to fly one mile – are expected to rise by 3.2% compared to 2023, the International Air Transport Association said in a semi-annual economic outlook. This is partly because capacity growth is constrained, which It leads to higher average prices.
In contrast, the corresponding figure for freight is expected to decline by 17.5% in 2024 as freight markets return to normal patterns after booming during the pandemic.
Airline activity is widely seen as a litmus test for business or consumer confidence, as well as trade.
The industry is characterized by high fixed costs and regulations that discourage most cross-border mergers, meaning it remains fragmented.
“The margin is still weak, and we are still looking at a margin of just over 3%,” Walsh said. “(This) performance is still well below the level the industry needs.”
In Asia, the International Air Transport Association more than tripled its 2024 industry profit forecast to $2.2 billion despite a slow recovery in international travel in China.
At $14.9 billion, unchanged from previous forecasts, North America remains the most profitable region with “strong consumer spending despite cost-of-living pressures,” the International Air Transport Association (IATA) said.
The International Air Transport Association said airlines had been exposed to unexpected maintenance problems. That appears to be a signal to fix bottlenecks in engines made by Pratt & Whitney, which are expected to ground hundreds of Airbus planes this summer.
Industry sources said on Friday that Airbus, the world's largest aircraft maker, is itself facing a new surge in supply problems, casting doubt on production plans for the second half. The planemaker said it was committed to its full-year delivery targets.
Rival Boeing (NYSE:) is producing far fewer of its best-selling 737 MAX planes than originally planned after a mid-air cabin panel explosion in January prompted U.S. regulators to limit production.
The 2025 IATA Annual General Meeting will be held in Delhi, India and hosted by Indian airline IndiGo, the organization said on Monday.
