• Thu. Aug 4th, 2022

IATA predicts better financial recovery for global airline industry

ByKimberly A. Brochu

Jun 20, 2022

The International Air Transport Association (IATA) has raised its outlook for the airline industry’s financial performance in 2022 as the pace of recovery from the COVID-19 crisis picks up. Industry losses are expected to narrow to $9.7 billion (an improvement from the October 2021 forecast for a loss of $11.6 billion) for a net loss margin of -1.2% . This is a huge improvement from losses of $137.7 billion (-36.0% net margin) in 2020 and $42.1 billion (-8.3% net margin) in 2021.

The global macroeconomic backdrop is key to the outlook for the sector. The forecast incorporates a strong global GDP growth assumption of 3.4% in 2022, down from last year’s strong 5.8% rebound. Inflation has been rising and is expected to remain elevated through 2022, declining over the course of 2023. And, as nominal interest rates rise, real interest rates are expected to remain low or negative for an extended period.

Efficiency gains and improved yields are helping airlines reduce losses even with rising labor and fuel costs (the latter being driven by a +40% increase in the global price of fuel). oil and a wider spread of crack this year). The industry-wide optimism and commitment to reducing emissions is evident in the expected net delivery of over 1,200 aircraft in 2022.

Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries and rising personal savings are fueling a resurgence in demand that will see passenger numbers hit 83 % of pre-pandemic levels in 2022.

In the Middle East, the reopening this year of international routes and long-haul flights in particular will provide a welcome boost to many. Region-wide, net losses are expected to narrow to $1.9 billion in 2022 from $4.7 billion last year. Revenue Passenger Kilometers (RPK) demand is expected to reach 79.1% of pre-crisis (2019) levels and capacity 80.5%.

Despite the economic difficulties, freight volumes are expected to reach a record high of 68.4 million tonnes in 2022.