DUBAI (June 3): The International Air Transport Association (IATA) has raised its forecast for the global airline industry to record a net profit of US$30.5 billion (RM143.56 billion) in 2024, up from the US$25.7 billion estimate the association made in December last year.
The latest forecast translates to an 11% net profit growth for global airlines, from an estimated US$27.4 billion in 2023.
IATA’s director general Willie Walsh attributed the growth to continuing demand for air travel, which the association’s poll found to be widely seen as a “good value for money” service.
“In a world of many and growing uncertainties, airlines continue to shore-up their profitability. The expected aggregate net profit of US$30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses,” he told the audience here at IATA’s annual general meeting.
This is expected to drive industry revenue to a record high of US$996 billion in 2024, up 9.7% from 2023, while total expenses are forecasted to reach historical highs as well, up 9.4% to US$939 billion.
Total travellers are expected to reach 4.96 billion in 2024 — a record high — while total air cargo volumes are expected to reach 62 million tonnes this year.
“With a record five billion air travellers expected in 2024, the human need to fly has never been stronger. Moreover, the global economy counts on air cargo to deliver the US$8.3 trillion of trade that gets to customers by air,” said Walsh.
“Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience are important.
“Profitability enables investments in products to meet the needs of our customers,and in sustainability solutions. We will need to achieve net zero carbon emissions by 2050,” he added.
Airlines’ margin per passenger barely enough to afford a coffee — IATA DG
Walsh said that while the airline industry is on the path to sustainable profits, there are still challenges, as the return on invested capital by airlines is still expected to be lower than the average cost of capital.
“A 5.7% return on invested capital is well below the cost of capital, which is over 9%. And earning just US$6.14 per passenger is an indication of just how thin our profits are — barely enough for a coffee in many parts of the world,” he said.
At a net profit of US$30.5 billion in 2024, Walsh said airlines’ net profit margins are expected to be 3.1%, a slight improvement from 3.0% in 2023.
Walsh said that to improve profitability, resolving supply chain issues is of critical importance so that fleets can be deployed efficiently to meet demand.
“And relief from the parade of onerous regulations and ever-increasing tax proposals would also help. An emphasis on public policy measures that drive business competitiveness would be a win for the economy, for jobs, and for connectivity. It would also place us in a strong position to accelerate investments in sustainability,” he said.