IATA Upgrades Outlook As Recovery Quickens

The International Air Transport Association (IATA) has announced an upgrade to its outlook for the airline industry’s 2022 financial performance as the pace of recovery from the COVID-19 crisis ramps up.

Forecast highlights include:

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-- Industry losses are expected to reduce to -US$9.7 billion (improved from the October 2021 forecast for an $11.6 billion loss) for a net loss margin of -1.2%. That 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.

-- Industry-wide profitability in 2023 appears within reach with North America already expected to deliver an $8.8 billion profit in 2022.

-- Efficiency gains and improving yields are helping airlines to reduce losses even with rising labour and fuel costs (the latter driven by a +40% increase in the world oil price).

-- Industry optimism and commitment to emissions reductions are 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 expanded personal savings are fueling a resurgence in demand that will see passenger numbers reach 83% of pre-pandemic levels in 2022.

“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty. Losses will be cut to $9.7 billion this year and profitability is on the horizon for 2023. It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets,” said Willie Walsh, IATA’s Director General.

Industry revenues are expected to reach $782 billion (+54.5% on 2021), 93.3% of 2019 levels. Flights operated in 2022 are expected to total 33.8 million, which is 86.9% of 2019 levels (38.9 million flights).

Passenger revenues are expected to account for $498 billion of industry revenues, more than double the $239 billion generated in 2021.

Cargo revenues are expected to account for $191 billion of industry revenues. That is down slightly from the $204 billion recorded in 2021, but nearly double the $100 billion achieved in 2019. Overall, the industry is expected to carry over 68 million tonnes of cargo in 2022, which is a record high.

Overall expenses are expected to rise to $796 billion. That is a 44% increase on 2021, which reflects both the costs of supporting larger operations and the cost of inflation in key items.

COVID-19 remains a risk factor for IATA’s outlook, which assumes that strong and growing population immunity to COVID-19 means there will not be a repeat of border closures that IATA calls “policy mistakes.”

“Governments must have learned their lessons from the COVID-19 crisis,” said Walsh. “Border closures create economic pain but deliver little in terms of controlling the spread of the virus. With high levels of population immunity, advanced treatment methods, and surveillance procedures, the risks of COVID-19 can be managed. At present, there are no circumstances where the human and economic costs of further COVID-19 border closures could be justified,” he added.

North America is expected to continue to be the strongest performing region and the only region to return to profitability in 2022. Supported by the large U.S. domestic market and the re-opening of international markets, including the North Atlantic, net profit is forecast to be $8.8 billion in 2022. Demand (RPKs) is expected to reach 95.0% of pre-crisis (2019) levels, and capacity 99.5%.