Global airline industry losses reduced to $9.7 billion – New Business Ethiopia

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According to the International Air Transport Association, global airline industry losses will fall to $9.7 billion. This is an improvement on the October 2021 loss forecast of $11.6 billion.

“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,” said IATA announcing today an upgrade to its outlook for the airline industry’s 2022 financial performance as the pace of recovery from the COVID-19 crisis quickens.

“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 labor and fuel costs (the latter driven by a +40% increase in the world oil price and a widening crack spread this year),” it said.

IATA also stated that industry optimism is evident in the expected net shipment 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. Despite economic challenges, cargo volumes are expected to set a record high of 68.4 million tons in 2022,” IATA said.

“Airlines are resilient. People fly in greater numbers. Even with increasing economic uncertainty, cargo is doing well. The loss will be reduced to $9.7billion this year, and profitability is possible 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.

As COVID-19 restrictions are eased and people return to traveling, revenues are rising. The challenge for 2022 will be to control costs.

“The reduction in losses is the result of hard work to keep costs under control as the industry ramps up. The 44% increase in costs and 55% rise in revenues has resulted in an improvement of the financial outlook. Profitability will be dependent on cost control as the industry returns to normal production levels. However, high fuel costs are likely to remain for a while. This includes the entire value chain. Our suppliers, including airports and air navigation service providers, need to be as focused on controlling costs as their customers to support the industry’s recovery,” said Walsh.

Source: newbusinessethiopia

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