Airlines predict almost $10bn in profits as demand helps push air fares higher
Air Be Said Challenges Luis Better As Are This There Areas Traffic France, Strikes Still Control In In Such Iag Summer Travel, Chief And Air Executive Than But Gallego Last For Will
Global airlines have more than doubled their forecast for the industry's 2023 profit to almost $10bn (€9.3bn), but warned that delays in getting planes to cope with rising demand could dampen their post-pandemic recovery.
"The pandemic years are behind us and borders are open as normal," head of the International Air Transport Association (IATA) Willie Walsh told its annual summit of some 300 carriers in Istanbul.
The airline industry’s main lobby body is doubling its estimate for global net profit in 2023 as a surge in flying drives up air fares, although risks include rising interest rates to combat spiralling inflation and lingering supply chain issues.
IATA boosted its industry profit forecast to $9.8bn from $4.7bn, based on strong travel demand and an easing in oil prices. But slender profit margins of 1.2% mean repairing damaged balance sheets and offering sustainable returns on investments will continue to be a headache for some airlines, Mr Walsh said.
This summer will be better than last for air travel, but there are still challenges in areas such as air-traffic control and strikes in France, IAG chief executive Luis Gallego said. IAG owns Aer Lingus, British Airways, Iberia, and Vueling.
The profit forecast reflected a boost in Europe, despite a wave of strikes. Airlines have reported strong results in recent months as they prepare for a busy summer season, with travel demand showing no sign of flagging despite peaking inflation. Pressure from oil prices has also eased this year.
Executive director of the International Energy Agency, Fatih Birol, told delegates that the prospect of higher prices has "increased a lot" as a result of Sunday's Opec+ deal.
Qantas chief executive Alan Joyce said that airlines saw their industry grind to a near-halt when the spread of covid closed borders in early 2020, but these have started to moderate as capacity comes back online. The IATA said that fares have not gone up in real terms since 2019.
In an unusual move, airlines have asked IATA — led by Mr Walsh, who used to run British Airways and Aer Lingus — to intervene directly with planemakers to make sure their frustrations are heard.
Airbus and Boeing have said supply chains are to blame.