At its AGM in Dubai, the global representative body for the airline industry, the International Air Transport Association (IATA), announced that its profitability forecast for the worldwide airline sector this year is now higher than it has been in its previous two forecasts. These previous profitability forecasts for 2024 were issued in June and December last year.

IATA now expects total airline net profits to amount to $30.5-billion this year, giving a net profit margin of 3.1%. This would be an increase over the current estimate of net profits of $27.4-billion for last year (with a net profit margin of 3%). For comparison, IATA’s December forecast was $25.7-billion, with a net profit margin of 2.7%.

“In a world of many and growing uncertainties, airlines continue to shore-up their profitability,” affirmed IATA director-general Willie Walsh. “The expected aggregate net profit of $30.5-billion in 2024 is a great achievement considering the recent deep pandemic losses. With a record five-billion air travellers expected in 2024, the human need to fly has never been stronger. Moreover, the global economy counts on air cargo to deliver the $8.3-trillion of trade that gets to customers by air. Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience is important. Profitability enables investments in products to meet the needs of our customers and in the sustainability solutions we will need to achieve net zero carbon emissions by 2050.”

IATA expects total airline operating profits this year to come to $59.9-billion, an increase of 14.7% from the $52.2-billion estimated for last year. Total revenues this year are forecast to be 9.7% higher, year-on-year (y-o-y), and to reach the record high of $996-billion. But total expenses are also expected to reach a record high – $936-billion; this would be a y-o-y increase of 9.4%.

IATA also now forecasts that the return on capital invested in airlines will be 5.7% this year. But the cost of capital is some 3.4 percentage points higher than this, or about 9.1%.

And the association now expects that there will be 1.4-million fewer airline flights this year than it forecast in December – the total number for this year is now predicted to be 38.7-million. This is because of the decelerating rate of deliveries of new airliners, owinf to manufacturing supply chain challenges that are persisting. The number of airliners expected to be delivered this year is now 1 583, a 11% cut in the previous estimate of 1 777.

“The airline industry is on the path to sustainable profits, but there is a big gap still to cover,” he cautioned. “[E]arning just $6.14 per passenger is an indication of just how thin our profits are – barely enough for a coffee in many parts of the world. To improve profitability, resolving supply chain issues is of critical importance so we can deploy fleets efficiently to meet demand. And relief from the parade of onerous regulation and ever-increasing tax proposals would also help. An emphasis on public policy measures that drive business competitiveness would be a win for the economy, for jobs, and for connectivity. It would also place us in a strong position to accelerate investments in sustainability.”