When global airline association IATA held its first in-person Global Media Day for three years this week, it was able to offer more good news on the industry’s progress out of the Covid-19 crisis.
Forecasting a global industry profit of $4.7 billion for 2023, it continues to suggest that while the long list of headwinds faced by the sector are “significant”, they represent “business as usual” concerns.
And given what the industry has been through during the pandemic, achieving a profitable turnaround so quickly would represent “a great achievement”, IATA director general Willie Walsh says.
Those headwinds remain a concern, however, creating a complex picture when it comes to predicting next year’s performance.
Indeed, IATA suggests that the risks in its forecast are skewed to the downside, with factors such as the soaring US dollar and high oil costs – specifically the high crack spread between crude oil and jet fuel – of particular concern.
It further acknowledges that the momentum created by pent-up demand for travel is likely to wane during the coming 12 months.
But there are potential “upside risks” too, including the relaxation of China’s draconian Covid-19 restrictions – progress on which was seen within hours of IATA presenting its forecast.
IATA also points out that while global GDP growth will slow significantly in 2023, it does not foresee a global recession.
Nevertheless, the association also highlights big differences in performance across regions and individual airlines, noting that many carriers still have much work to do to repair balance sheets.
Notably, the North America region essentially drives the global profitability, with a forecast net profit of $11.4 billion dwarfing tiny profits in Europe and the Middle East, and partially offsetting continued losses in Latin America, Africa and Asia-Pacific.
For some, therefore, a small industry profit in 2023 could belie significant challenges below the surface. But if it is achieved, it would still represent an important milestone for an industry that has seen unimaginable pain over the past three years.
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