They expect to carry 4.35 billion passengers worldwide this year, not far from the record of 4.54 billion in 2019, announced Monday their main international association, IATA, meeting at a general assembly in Istanbul.

This vigorous recovery in traffic, thanks in particular to the reopening of China, will result in a return to profits for carriers. They are expected to generate $9.8 billion in net income this year – double what IATA had previously expected, which also halved its 2022 loss estimates to $3.6 billion.

The overall turnover of air carriers should reach $ 803 billion, within reach of $ 838 billion in 2019, according to IATA, which has therefore revised upwards its previous projections ($ 779 billion).

Even though the industry's operating margins will remain very low this year, at 1.2%, these profits, the first since the beginning of the pandemic, will mark a dramatic improvement from the $42 billion lost in 2021 and the abyss of 2020 ($137.7 billion).

Not all geographies will recover profits this year, IATA warned. North American, European and Middle Eastern carriers are expected to move largely in the green, with respectively $ 11.5, $ 5.1 billion and $ 2 billion combined.

But companies in the Asia-Pacific region (-6.9 billion dollars), Latin America (-1.4 billion) and Africa (-500 million) will remain loss-making.

"The financial performance of airlines is better than expected. The stronger profitability is supported by several positive developments," said Willie Walsh, IATA's chief executive.

Supply issues

Among them: "China lifted Covid-19 restrictions earlier than expected. Freight revenues remain higher than before the pandemic, although volumes do not. And the costs are starting to ease. Kerosene prices, which are still high, contracted in the first half of the year," Walsh added.

Companies are expected to spend some $2023 billion on fuel in 215, or 28 percent of their costs, at an average kerosene price of $98.5 per barrel, according to IATA. In 2022, this course was $135.6 and forced carriers to spend nearly 30 percent of their spending on it, up from 24 percent in 2019.

Willie Walsh, director general of IATA, in London, July 10, 2022 © Justin TALLIS / AFP / Archives

Walsh, however, tempered that optimism by noting that, on average, airlines earned only $2.25 per passenger.

In this context, "many companies will struggle to restore their accounts and offer sustainable returns on investment" to their shareholders, conceded the IATA leader.

The organization, which brings together some 300 airlines claiming 83% of global air passenger traffic, noted that the profitability of the sector remained "fragile" and could be affected by several factors.

Central banks have raised rates to combat inflation while trying to avoid a recession, but that risk remains, IATA noted. "If a recession causes job losses, the outlook for the sector could turn negative," according to IATA.

Similarly, "the war in Ukraine has no consequences on the profitability of most companies", but the sector would suffer from a new geopolitical escalation, the organization stressed.

Travelers in the departure hall of Singapore's Changi Airport, March 31, 2023 © Catherine Lai / AFP / Archives

On everyone's lips at the Istanbul rally, shortages of raw materials and parts are affecting the sector's ability to grow, IATA said.

Due to supply chain disruptions "that aircraft manufacturers and engine manufacturers have failed to solve," airlines are struggling to "maintain and deploy their current fleets," the organization criticized.

In 2020, the first year of the pandemic, the number of air passengers had plummeted by 60% to 1.8 billion. It had rebounded slightly in 2021 to 2.3 billion and then recovered in 2022 74% of the pre-crisis level, or some 3.3 billion travelers, according to the International Civil Aviation Organization, a UN agency.

© 2023 AFP