(AOF) – The International Air Transport Association (IATA) predicts a return to profitability for the global airline industry in 2023, with airlines continuing in 2022 to reduce their losses from the effects of the Covid pandemic -19. In 2023, the companies are expected to post a small net profit of $4.7 billion, or a net profit margin of 0.6%. According to Iata, this would be the first profit since 2019, when the sector’s net profits were $26.4 billion (net profit margin of 3.1%).
In 2022, net airline losses are expected to be $6.9 billion (an improvement from the $9.7 billion loss for 2022 in Iata’s June outlook). This is a clear improvement from the losses of $42.0 billion and $137.7 billion recorded in 2021 and 2020 respectively.
Iata says the improved outlook for 2022 is largely driven by improved yields and cost containment in the face of rising fuel prices.
Passenger yields are expected to increase by 8.4% (vs. 5.6% forecast in June) and passenger revenue is expected to reach $438 billion (vs. $239 billion in 2021).
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has
– European number 1 in air transport, born in 2000 from the merger between Air France, created in 1933, and the Dutch KLM, founded in 1019;
– Turnover of €14.3 billion achieved 86% in passenger transport and cargo, then maintenance for 7% and the subsidiary Transavia for 7%;
– Business model based on optimizing the use of the fleet, improving operational performance, simplifying structures and connectivity on the one hand, growing the short and medium-haul network and developing long-haul by alliances (alliance of 19 airlines in SkyTeam) and partnerships;
– Capital held 28.6% by the French State, 9.3% by the Dutch State, 9% by CMA-CGM, 4.7% by China Airlines and 2.5% by Delta Airlines, Anne-Marie Couderc chairing the 19-member board of directors, with Benjamin Smith as chief executive;
– Strengthening of the balance sheet: at the end of September, shareholders’ equity still negative but improved by €4 billion in 2022, net debt reduced to €6 billion, liquidities of €12.3 billion.
Challenges
– Transformation strategy via organization, cost reduction, fleet management and transfer to Transavia of the French domestic network outside Marseille, Nice and Toulouse:
– debt leverage reduced to 3-3.5% in 2023,
– operating margin of 7 to 8% in 2024;
– Innovation strategy:
-at the service of the attentive relationship with the customer (massive use of voice assistance techniques, artificial intelligence, blockchain and augmented reality),
– towards clean aviation, support for sustainable fuels, electric taxiing for ground towing, monitoring of the atmosphere, etc.;
– Environmental strategy aimed at reducing CO2 emissions by 50% (vs 2005):
– Climate Plan with 6 priorities including modernization of the fleet (€2.5 billion invested in aircraft consuming 25% less fuel), sustainable fuels or SAF (3% in 2023, 10% in 2030), compensation plan with the CORSIA system;
– fight against noise pollution,
– 60% recycling of hazardous waste in 2020 and reduction, by 2030, of residual waste by half and commitment to biodiversity;
– Group capacity at 89% of the 2019 level and load factor at 88%, close to the 2019 level (90%);
– Rise in kerosene prices offset by cost savings;
– Increase in unit revenue per passage, by €7.3 at the end of September.
Challenges
– Uncertainties about Chinese airports and lack of staff at world airports;
– Rise in kerosene prices offset by cost savings;
– Continued debt reduction by reimbursing public aid – at the end of 2022 first, then May 2024 – and strengthening equity by issuing hybrid bonds in 2022 and 2023;
– Rumors of interest for the Portuguese company TAP;
– After a doubling of revenues and a confirmation of the return to net profitability at the end of September, anticipations for 2022 of a capacity in seat-km equal to 80% of 2019 levels for Air France-KLM and 115% for Transavia and an operating profit of €900 million;
– No dividend payment in 2021 (for the 7th consecutive year).
Once again weakened results for European airlines
With fuel accounting for up to 35% of their costs, professionals believe European airlines are unlikely to return to profit until 2023 or 2024 at the earliest. These players predict that energy prices will remain high at least until 2023. The International Air Transport Association (IATA) has announced a forecast of cumulative losses of 9.7 billion dollars in 2022 for airlines at around the world, it will still be necessary to wait until 2023 to see the return to profits on a global scale, due in particular to the surge in oil costs and the rise in labor costs. On the positive side, travel demand seems to be resisting the uncertainties caused by the international economic and political situation. However, the uncertainties concerning the Covid, the war in Ukraine, as well as the rise in prices are strengthening last-minute reservations. According to Iata, only 8% of international reservations made at the end of May went beyond September.
The social climate is deteriorating in low-cost companies
These companies are benefiting from a very strong recovery. They had already managed to monopolize 40% of air traffic in 2021, this proportion could even rise to 50% this year. However, strike movements have affected the activity of Volotea, EasyJet and Ryanair, with confrontations over pay and working conditions. In general, the sector faces a shortage of personnel. After having severely cut their workforce in 2020 and 2021, companies and airports must urgently recruit to support the relaunch of activity.