Outlook improves for airline profitability in 2024

IATA has released strengthened profitability projections for airlines in 2024 compared with its June and December 2023 forecasts.

Despite this, it notes that an aggregate return above the cost of capital, however, continues to elude the global airline industry.

Highlights of IATA’s outlook include:

  • Net profits are expected to reach $30.5 billion in 2024 (3.1 per cent net profit margin)
  • That will be an improvement on 2023 net profits which are estimated to be $27.4 billion (3.0% net profit margin).
  • It is also an improvement on the $25.7 billion (2.7% net profit margin) forecast for 2024 profits that IATA released in December 2023.
  • Return on invested capital in 2024 is expected to be 5.7 per cent which is about 3.4 percentage points (ppt) below the average cost of capital.
  • Operating profits are expected to reach $59.9 billion in 2024, up from an estimated $52.2 billion in 2023.
  • Total revenues are expected to reach $996 billion (+9.7%) in 2024—a record high.
  • Total expenses are expected to reach $936 billion (+9.4%) in 2024—a record high.
  • Total travellers are expected to reach 4.96 billion in 2024—a record high.
  • Total air cargo volumes are expected to reach 62 million tonnes in 2024.

5 billion travellers for 2024

“In a world of many and growing uncertainties, airlines continue to shore-up their profitability. The expected aggregate net profit of $30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses,” said IATA’s director general, Willie Walsh. “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.”

Walsh continued: “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.”

Sustainable profits ahead

IATA’s director general pointed out that: “The airline industry is on the path to sustainable profits, but there is a big gap still to cover. A 5.7 per cent  return on invested capital is well below the cost of capital, which is over 9%. And earning 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,” said Walsh. “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.”

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