The global representative body for the airline industry, the International Air Transport Association (IATA), announced on Monday a major upgrade in its forecast for airline industry profitability for this year. The report was issued at the start of IATA’s 2023 annual general meeting in Istanbul, Türkiye.

IATA now believes that airline industry net profits this year will hit $9.8-billion, representing a profit margin of 1.2%. Its previous forecast for 2023, issued in December, had been for a net profit of $4.7-billion. Operating profits are expected to total $22.4-billion this year, as against the December prediction of $3.2-billion. The new forecast for this year is more than twice the industry operating profit of $10.1-billion estimated for last year.

Total revenues are predicted to reach $803-billion, which will be a growth rate of 9.7%, year-on-year. This will be the first year that industry revenues will exceed $800-billion since 2019, the last year before the Covid-19 pandemic hit. (The figure for 2019 was $838-billion.) Cost escalation, however, is forecast to be contained to a level of 8.1%.

The association also expects that air passengers will number 4.35-billion this year, close to the figure of 4.54-billion for 2019. Cargo demand for this year is expected to total 57.8-million tons, below the 61.5-billion tons recorded in 2019, because of a “sharp” deceleration in the volume of international trade.

“Airline financial performance in 2023 is beating expectations,” highlighted IATA director-general Willie Walsh. “Stronger profitability is supported by several positive developments. China lifted Covid-19 restrictions earlier in the year 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.”

IATA’s various regions performed, as usual, differently, but all will either increase their net profits year-on-year or reduce their losses. Three regions are expected to increase their net profits: North America from an estimated $9.1-billion last year to a forecast $11.5-billion for this year; Europe from an estimated $4.1-billion in 2022 to a predicted $5.1-billion for 2023; and the Middle East, from an estimated $1.4-billion last year to a forecast $2-billion for this year.

The Asia-Pacific is expected to cut its losses from an estimated $13.5-billion in 2022 to a predicted $6.9-billion for this year, while Latin America should see last year’s estimated loss of $3.9-billion shrink to a loss of $1.4-billion in 2023. Africa should see its 2022 loss of $0.8-billion reduce to a loss of $0.5-billion this year. “Africa remains a difficult market in which to operate an airline, with economic, infrastructure and connectivity challenges impacting the industry performance,” noted IATA. “Nevertheless, despite these challenges, there is still robust demand for air travel in the region which underpins the continued move towards a return to overall industry profitability.”

“Resilience is the story of the day and there are many good reasons for optimism,” affirmed Walsh. “Achieving profitability at an industry level after the depths of the Covid-19 crisis opens up much potential for airlines to reward investors, fund sustainability, and invest in efficiencies to connect the world even more effectively. That’s a big ‘to do’ list to achieve with just a 1.2% net profit margin. That’s why we call on governments to keep their focus on initiatives that will strengthen safe, sustainable, efficient, and profitable connectivity.”