The airline sector has gone on to make a projection to register a net profit of $25.7 billion in 2024, as there happens to be more normal growth, which is expected in both passenger as well as cargo segments, global grouping IATA said last month.
For 2023, the net profit is expected at $23.3 billion, which happens to be higher than the $9.8 billion as anticipated by the International Air Transport Association- IATA in June 2023.
It is well to be noted that IATA happen to have over 300 airlines as its members. The airline sector’s operating profit is all set to touch $49.3 billion in 2024, up from $40.7 billion in 2023.
In 2024, the overall revenue is expected to surge 7.6% to $964 billion as compared to 2023.
IATA says that some 4.7 billion people are forecasted to travel in 2024, which is indeed a historic high that goes on to exceed the pre-pandemic level of 4.5 billion as recorded in 2019.
The industry passenger load aspect is closing on to its 2019 level, which happens to be supporting the financial recovery of the airlines, says Andrew Matters, who happens to be the IATA Director of Policy and Economics.
The airline sector’s net profit is anticipated to reach $25.7 billion in 2024, which is a 2.7% net profit margin. This is going to be a slim improvement over 2023, which is expected to show a $23.3 billion net profit, which is a 2.6% net profit margin, said IATA while coming up with its review of 2023 as well as the outlook for 2024.
The cargo volume is expected to be higher at 61 million tonnes in 2024 as compared to the 58 million tonnes that were witnessed last year.
Willie Walsh, the Director General of IATA, said that from 2024, the perspective goes on to indicate that one can expect more normal growth scenarios for both passenger as well as cargo, and while the recovery happens to be impressive, a net profit margin of 2.7% would be far below what investors in any other industry would go on to accept.
As per him, the airlines are bound to compete quite fiercely for their customers, but at the same time, they remain far too burdened due to onerous regulations, high infrastructure costs, fragmentation, as well as supply chain populated with oligopolies.
As for the Asia Pacific market, IATA said that while region’s some of the main domestic markets, like China, Australia, and India, have gone on to recover quickly from the pandemic, global travel to and from the region has been pretty subdued since China only eradicated the last of its global travel restrictions in mid-2023.
The Asia Pacific region is all set to report a net loss of $ 0.1 billion last year and also have a net profit of $ 1.1 billion in 2024.
IATA opines that the overall revenue in 2024 is expected to grow faster than expenses, i.e., at 7.6% as against the 6.9%, strengthening profitability. Although operating profits are anticipated to rise 21.1%, i.e., from $ 40.7 billion in 2023 to $ 49.3 billion in 2024, net profit margins grew at less than half the pace, which was 10%, primarily because of increased interest rates, which are expected in 2024.
International economic developments, war, supply chains, as well as regulatory risk are going to be the main factors that may go on to positively or negatively affect the airline sector’s profitability.