Tim Hefer and Lisa Barrington
DUBAI (Reuters) – Global airlines on Monday raised their 2024 profit forecast and forecast industry-wide revenue will barely hit $1 trillion as record numbers of travelers board flights.
The International Air Transport Association (IATA) said it expects the global industry to post profits of $30.5 billion this year, up from an upwardly revised $27.4 billion in 2023 as carriers maintain control over cost bases on the workforce, despite recent strikes.
It comes just four years after the industry collapsed with a $140 billion loss in 2020 as a result of the pandemic, and exceeds the $25.7 billion forecast for 2024 released in December.
“The environment is better than we expected, particularly in Asia,” Chief Executive Willie Walsh told Reuters on the sidelines of the annual meeting of IATA’s more than 300 members, who account for more than 80% of global air traffic.
However, the airline industry has warned that its ability to meet the sharp rebound in travel demand is limited by disruptions in global supply chains, including the supply of its own aircraft.
Passenger revenues (or the average amount a passenger pays per flight mile) are expected to rise 3.2% from 2023, IATA said in its biannual economic forecast. This is partly due to the fact that capacity growth is limited, causing average fares to rise.
In contrast, the corresponding figure for freight is expected to fall 17.5% in 2024 as freight markets return to normal after booming during the pandemic.
Airline performance is widely seen as a litmus test for business or consumer confidence, as well as trade.
The industry has high fixed costs and regulations that prevent most cross-border mergers, meaning it remains fragmented.
“Margins remain very thin; we still expect margins to be just over 3%,” Walsh said. “(These) numbers are still well below what the industry should be.”
In Asia, IATA more than tripled its 2024 industry profit forecast to $2.2 billion, despite a slow recovery in international traffic in China.
North America, at $14.9 billion, unchanged from previous forecasts, remains the top-grossing region with “strong consumer spending despite cost-of-living pressures,” IATA said.
IATA said the airlines were experiencing unexpected maintenance problems. This appears to be a reference to repairs to bottlenecks in engines built by Pratt & Whitney that are expected to ground hundreds of Airbus planes this summer.
Industry sources said on Friday that Airbus, the world’s largest plane maker, was itself facing a new surge of supply problems, casting doubt on production plans for the second half of the year. The aircraft manufacturer said it is sticking to its targets for the full year.
Rival Boeing (NYSE:) is producing far fewer of its best-selling 737 MAX planes than originally planned after a mid-air cabin panel explosion caused U.S. regulators to cap production in January.
IATA’s annual general meeting in 2025 will be held in Delhi, India, under the auspices of Indian carrier IndiGo, the organization announced on Monday.