Airlines on recovery path

IATA predicts that with rise in travel, the industry losses will reduce to US$ 9.7 billion, for a net loss margin of 1.2 per cent.

The International Air Transport Association (IATA) forecasts that airlines industry losses will be reduced to US$ 9.7 billion (down from an October 2021 loss of US$ 11.6 billion), for a net loss margin of 1.2 per cent. It represents a significant improvement over losses of US$ 137.7 billion (–36 per cent net margin) in 2020 and US$ 42.1 billion (–8.3 percent net margin) in 2021.

Revenues: Industry revenues are expected to reach US$ 782 billion, or 93.3 per cent of 2019 levels. Flights operated in 2022 are expected to total 33.8 million, which is 86.9 per cent of 2019 levels. Passenger revenues are expected to account for US$ 498 billion of industry revenues, more than double the US$ 239 billion in 2021.

Expenses: Overall expenses are expected to rise by 44 per cent to US$ 796 billion in 2021. At US$ 192 billion, fuel is the industry’s largest cost item in 2022. The war in Ukraine is keeping prices for Brent crude oil high. Fuel will account for about a quarter of all costs in 2022. Labour is the second highest operational cost item.

Economic factors: The forecast incorporates an assumption of solid global GDP growth of 3.4 per cent in 2022, down from the strong 5.8 per cent rebound last year. Inflation is expected to remain elevated throughout 2022, waning over the course of 2023. While nominal interest rates are rising, real interest rates are expected to remain low or negative for a sustained period.

IT IS A TIME FOR OPTIMISM, EVEN IF THERE ARE STILL CHALLENGES ON COSTS, ESPECIALLY FUEL