Airlines return to profits after two difficult years

Airlines return to profits after two difficult years
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The majority of airlines will again be running profitably next year as air travel resumes a normal service after nearly two years of restrictions due to Covid-19, according to the International Air Transport Association (Iata). Iata forecasts a net profit of €4.5 billion for the industry next year, with over 4 billion passengers expected.

However, airline profitability will remain "extremely thin", Willie Walsh, Iata's director general, pointed out during a press conference in Geneva. "Next year's net profit will be the equivalent of €1.05 per passenger on average – less than the price of a cup of coffee at the airport."

Small as they are, the profits will move airlines out of the red after losing money in 2020 and 2021. Iata's calculations showed that the pandemic cost the industry €180 billion. Now, air traffic has been picking up and some airports are even struggling with the new surge of passengers.

The biggest rebound has been taking place for North American carriers, although Europe and the Middle East are also expected to return to small profits. Yet in Asia, difficulties persist and are expected to run to a $6.6 billion deficit; this is largely down to the continuation of Covid-related travel restrictions.

Looking up whilst keeping feet on the ground

Despite the many economic uncertainties, Walsh is confident that there are "many reasons to be optimistic," citing an expected drop in oil prices and continued growth in demand for travel after two years of the pandemic. Yet the industry expert warned that with profit margins so small, the industry remains vulnerable to slight variables in any market factors.

He stressed the need for vigilance and flexibility and pointed to potential complications in the form of "regulations, high costs and inconsistent government policies", as well as an overall increase in airport tax prices.

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"We cannot tolerate a situation where airports are trying to gouge airlines and passengers by dramatically increasing airport charges," said the head of Iata, which represents more than 300 airlines worldwide.


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