Global airlines on Monday raised their profit forecast for 2024 and projected total industry revenue to approach $1 trillion, as a record number of passengers are expected to take flights.
The International Air Transport Association (IATA) said it expects the global airline industry to generate $30.5 billion in profits this year, up from the revised $27.4 billion in 2023, despite recent strike actions as airlines continue to control basic labor costs.
This comes just four years after the industry lost $140 billion due to the pandemic, surpassing the previous forecast of $25.7 billion for 2024 made last December.
"The overall environment is better than we expected, especially in Asia," IATA Director General Willie Walsh told Reuters during the organization's annual meeting. IATA has over 300 member companies covering more than 80% of global air transport.
However, the airline industry warns that global supply chain disruptions, including aircraft deliveries, are hindering its ability to meet strong travel demand.
In its semi-annual economic outlook, IATA stated that passenger yields (the average fare paid per mile flown per passenger) are expected to increase by 3.2% in 2024 compared to 2023. This is partly due to limited capacity growth, which has driven up average ticket prices.
In contrast, the cargo market is expected to decline by 17.5% in 2024 as the pandemic-driven surge in the cargo market returns to normal.
Airline activity is often seen as a barometer of business or consumer confidence and trade.
The industry has high fixed costs and regulations that limit cross-border mergers, keeping it fragmented.
"Profit margins remain thin; we are still seeing just over 3% profit margins," Walsh said. "This performance is still far below what the industry should achieve."
In Asia, despite the slow recovery of international travel from China, IATA raised the industry's profit forecast for 2024 by more than three times to $2.2 billion.
North America remains the most profitable region, with profits of $14.9 billion, unchanged from earlier forecasts. IATA said that despite high living costs, consumer spending remains strong.
IATA said airlines have been hit by unexpected maintenance issues. This appears to refer to the maintenance bottleneck issues with engines produced by Pratt & Whitney, which are expected to ground hundreds of Airbus aircraft this summer.
Industry sources said on Friday that Airbus, the world's largest plane manufacturer, is itself facing new supply issues, casting doubt on its production plans for the second half of the year. Airbus said it would stick to its full-year delivery targets.
Rival Boeing's production of its best-selling 737 MAX aircraft remains far below plans after U.S. regulators restricted its output following an engine explosion in January.
IATA announced that its 2025 annual meeting will be hosted by Indian carrier IndiGo in Delhi, India.
