IATA raises 2024 net profit forecast for airlines

By TIN Media | Airlines Published 1 month ago on 4 June 2024
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The International Air Transport Association (IATA) increased its forecast for airline profitability in 2024 from US$25.7bil in December 2023 to US$30.5bil in net profit. According to the report, the increased profitability is expected to surpass US$ 27.4 billion in 2023.
According to IATA, despite pressure from rising costs of living, North America remains the region that contributes most significantly to industry profitability thanks to good yields, high passenger load factors, and robust consumer spending.
In the meantime, the rebounding domestic markets in China, Japan, and Australia are predicted to generate half of the rise in revenue passenger kilometres (RPK) worldwide in 2024, with Asia Pacific bearing the primary responsibility for this expansion.
The region's foreign travel is still relatively low, particularly in China, where it is still lower than it was before the Covid pandemic. 

According to a statement, "This shows that there is still a lot of pent-up demand for cross-border travel in the region, which will probably boost future growth prospects."
In terms of revenue, IATA predicts it will reach a record high of US$996 billion in 2024.

According to the report, passenger revenues would reach US$744 billion in 2024, up 15.2% from US$646 billion in 2023, and RPK growth would average 11.6% annually.

On the other hand, it is anticipated that freight revenues will decrease from US$138bil in 2023 to US$120bil in 2024.
"Cargo yields are predicted to decline 17.5% in 2024 while staying marginally above 2019 levels, notwithstanding the strength of demand.

This is a return to normal following exceptionally high pandemic levels. The substantial belly capacity that joined the market in 2023 along with the revival of passenger travel is a major contributing element to this, the statement stated.
IATA predicted that there would be 4.96 billion passengers worldwide this year, setting a new high and that 62 million tons of air cargo will be carried in 2024.
Airlines are predicted to make US$59.9 billion in operational profits in 2024, up from a projected US$52.2 billion in 2023. Still, the international airline industry has not achieved an aggregate return over the cost of capital, according to IATA. 

It stated that in 2024, a 5.7% return on invested capital is anticipated, almost 3.4 percentage points less than the average cost of capital.
Although there is still a significant distance to be filled, the aviation sector is headed toward sustainable profitability. The 5.7% return on invested capital is significantly less than the capital cost of almost 9%.
And the fact that we only make US$6.14 for each passenger shows how meagre our revenues are. In many parts of the world, it is hardly enough for a coffee, according to Willie Walsh, director-general of IATA.
Furthermore, it is anticipated that the average price of jet fuel will be US$113.8 per barrel in 2024, meaning that the fuel bill will be US$291bil, or 31% of all operational expenditures. IATA said that since the crack spread is predicted to average 30% in 2024, rising crude oil prices will likely continue to be further accentuated for airlines.


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