Airlines see return to profit in 2023, clash with airports

GENEVA, Dec 6 (Reuters) – Global airlines are forecasting their first industry-wide profits since 2019 next year as air travel rebounds from COVID-19 restrictions, and a new war of words with airports erupted on Tuesday over airfares rising and land charges. .

Airlines lost tens of thousands of dollars in 2020 and 2021 due to the pandemic, but air travel has partially recovered and some airports have struggled to cope.

The International Air Transport Association (IATA) now expects a net profit of $4.7 billion for the industry next year, with more than 4 billion passengers flying. It had previously only said that profits were “under control” in 2023.

For 2022, IATA narrowed its forecast for industry-wide losses to $6.9 billion from $9.7 billion.

“That is a remarkable achievement considering the scale of the financial and economic damage caused by the pandemic restrictions imposed by the government,” IATA Director General Willie Walsh said on Tuesday, referring to the projected return to profit for 2023.

But the former head of British Airways and IAG has warned that many airlines will continue to struggle next year, citing regulations, high costs and inconsistent government policies – and reopening long-running disputes with airports.

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“It’s very important that everyone understands how fragile the recovery is. Yes, we are recovering; the momentum is improving; yes, we expect it to continue to improve in 2023,” Walsh told a news conference annual for the media.

“But the margins we are operating with are very small and we cannot accept a situation where airports in particular try to trick airlines and their passengers by significantly increasing airport charges. Every cent counts.”

Airports immediately pointed the finger back at airlines. Tensions have been high since the chaos of Europe’s summer travel.

“Consumers are accepting huge increases in air fares from airlines, reflecting inflationary pressures and the fact that they are firmly in control of the capacity they put on the market,” said Olivier Jankovec, director general of airport industry association ACI Europe , by Reuters.

Airport charges reflect the same inflationary pressures, he said, adding: “So I ask you, who is really saying who is here?”

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Walsh has previously defended increases in oil-fuelled fees and warned that the switch to green fuels could push prices up further.

DOWN RISK

IATA believes that global air traffic levels will return to pre-COVID or 2019 levels by 2024, led by the United States, and with the Asia-Pacific “especially falling.”

IATA Chief Economist Marie Owens Thomsen warned that the risk to the latest forecasts for the sector was still “skewed to the downside” and that China was the “key variable”. Airline traffic is closely related to consumer and business confidence.

Beijing has begun easing draconian zero-covid-19 policies and may announce 10 new COVID-19 mitigation measures as early as Wednesday, two sources with knowledge of the matter told Reuters on Monday. adding to the 20 revealed in November.

If China does not loosen restrictions, the profitability of the airlines would be affected. Another risk to the 2023 outlook is that some economies will fall into recession, IATA said.

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Walsh also hit out at jet manufacturers struggling to deliver aircraft and blaming their supply chains.

“It’s causing a lot of frustration. It’s adding to the cost base. When I talk privately with CEOs it’s causing a lot of anger,” he said.

Delays left Airbus ( AIR.PA ) facing a near-record challenge in December and its year-end delivery target could be trimmed as early as this week, Reuters reported on Friday.

On consolidation, Walsh said the airlines had survived the worst of the downturn, but Europe should still be watched.

“I think the challenge for some airlines is still there, because as we have seen, the industry is still only slightly profitable. In fact, in Europe we can say that we break even,” said Walsh.

“So there is clearly still financial pressure. The difference is that airlines are generating cash now. Liquidity was the key issue.”

Reporting by Emma Farge, Additional reporting by Tim Hepher, Editing by Louise Heavens and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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