Global airlines raise their profit forecasts for 2024 – 06/03/2024 at 09:07

((Automated translation by Reuters, please see disclaimer

(Corrected date from June 2 to June 3 in dateline and corrected typographical error in 7th paragraph) by Tim Hepher and Lisa Barrington

Global airlines on Monday raised their profit forecasts for 2024 and expect revenue of nearly $1 trillion for the entire sector as record numbers of travelers take flight. plane.

The International Air Transport Association (IATA) said it expects the global industry to generate $30.5 billion in profits this year, more than an upward revision of $27.4 billion dollars in 2023 as carriers maintain underlying labor costs despite recent strikes.

These results come just four years after the sector collapsed and posted a $140 billion loss in 2020 as a result of the pandemic.

“The environment is better than we expected, particularly in Asia,” Chief Executive Willie Walsh told Reuters on the sidelines of an annual meeting of IATA’s more than 300 members, who represent more than 80% of global air traffic.

However, the airline industry warned that its ability to meet a strong recovery in travel demand was being hampered by disruptions in global supply chains, including deliveries from its own fleets.

Passenger revenues – or the average amount paid by a passenger to travel a mile – are expected to strengthen by 3.2% from 2023, IATA said in its biannual economic outlook. This is partly because capacity growth is limited, leading to higher average fares.

In contrast, the corresponding figure for freight is expected to fall by 17.5% in 2024, as freight markets return to normal patterns after booming during the pandemic.

Airline activity is widely seen as a litmus test for business and consumer confidence, as well as trade.

The sector has high fixed costs and regulations that discourage most cross-border mergers, meaning it remains fragmented.

“The margin remains very low; we still expect a margin of just over 3%,” Mr Walsh said. “(This performance) is still well below where the industry needs to be.”

In Asia, IATA more than tripled its profit forecast for 2024 to $2.2 billion, despite the slow recovery of international travel in China.

At $14.9 billion, unchanged from previous forecasts, North America remains the most profitable region with “strong consumer spending despite cost of living pressure”, IATA said.

IATA said airlines had been hit by unforeseen maintenance issues. That appears to be a reference to bottlenecks in repairing engines built by Pratt & Whitney RTX.N , which are expected to ground hundreds of Airbus AIR.PA planes this summer.

Industry sources said on Friday that Airbus, the world’s largest plane maker, was itself facing a new wave of supply problems, casting production plans for the second half of the year into doubt. The automaker said it was sticking to its full-year delivery targets.

Rival Boeing BA.N is producing far fewer 737 MAX jets than expected after a mid-flight cabin panel explosion in January prompted U.S. regulators to limit its production.

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