The global airline industry's annual profit forecast for 2023 more than doubled on higher travel demand and lower jet fuel prices in the first half of the year, although economic and geopolitical risks continue to loom over the outlook.
The industry is expected to collectively earn $9.8 billion in net income this year, up from a December forecast of $4.7 billion, the International Air Transport Association said on Monday.
This is in marked contrast with net losses of $183.3 billion – the deepest in aviation history – from 2020 to 2022.
The net profit margin for 2023 stands at 1.2 per cent, compared with 3.1 per cent in 2019.
China's earlier-than-expected lifting of Covid-19 restrictions, as well as cargo revenue that remained above pre-pandemic levels and jet fuel prices that moderated over the first half of 2023, have prompted Iata to raise its annual profit forecast.
Annual total revenue is set to grow by 9.7 per cent annually to $803 billion in 2023, outpacing the 8.1 per cent growth in expenses of $781 billion and strengthening profitability.
This tops the $800-billion mark for the first time since 2019 when airlines recorded $838 billion in revenue.
About 4.35 billion people are expected to travel in 2023, close to the 4.54 billion that flew in 2019 before the onset of the pandemic.
“The pandemic years are behind us and borders are open as normal. Despite economic uncertainties, people are flying to reconnect, explore and do business,” said Iata director general Willie Walsh at the opening of the aviation body's annual general meeting in Istanbul on Monday.
“Airports are busier, hotel occupancy is rising, local economies are thriving and the airline industry has moved into profitability.”
Passenger revenue is expected to rise by 27 per cent annually to $546 billion this year as Covid-19 restrictions have now been lifted in all major markets.
In terms of airline costs, jet fuel is expected to average $98.50 a barrel in 2023, amounting to a total bill of $215 billion.
That is cheaper than the $111.90 a barrel previously expected in December 2022 and below the average cost of $135.60 recorded in 2022, Iata said.
Fuel costs will account for 28 per cent of airline's average costs, which is still above the 24 per cent recorded in 2019.
Airlines have managed to sufficiently control non-fuel costs despite inflationary pressures, Iata said.
Despite the stronger profitability outlook, Mr Walsh warned of the risks ahead.
“Margins, however are wafer-thin … airlines will make on average $2.25 per passenger, so the value retained by airlines for the average plane trip booked won't even buy you a subway ticket in New York,” he said.
“Clearly that level of profitability is not sustainable, but considering we lost $76 per passenger in 2020, the velocity of recovery is strong.”
Risks to the industry's profit outlook include measures to fight inflation, labour shortages in some areas, continuing supply chain problems and rising airport fees, Mr Walsh said at the meeting of more than 300 airline members.
Mr Walsh said original equipment manufacturers had been “far too slow” in dealing with supply chain blockages that have driven up costs and limited airlines' ability to secure aircraft.
“Airlines are beyond frustrated and solutions must be found,” he said.
“Oil companies did very well on our tab as the crack spread for jet fuel was at historic highs for most of 2022 until April of this year. And there are grievous examples of some airports shifting their costs of their inefficiency to us.”
In terms of air cargo, volumes dropped below 2019 levels although revenue remains above the industry's pre-pandemic performance.
Cargo volume is expected to hit 57.8 million tonnes in 2023, slipping below the 61.5 million tonnes carried in 2019, due to a “sharp” slowdown international trade volumes, according to Iata.
However, cargo revenue has been forecast at $142.3 billion, a sharp decline from $210 billion in 2021 and $207 billion in 2022 but well above the $100 billion earned in 2019.
Cargo yields will be hit, firstly, by the ramp-up of passenger capacity, which automatically increases available freight capacity, and secondly, by the potential negative effects on international trade inflation-fighting measures.
Yields are expected to “correct” with a 28.6 per cent decline this year – compared with pandemic-triggered yield increases of 54.7 per cent in 2020, 25.9 per cent in 2021 and 7.4 per cent in 2022 – but still remain high by historical comparisons.
While the global aviation industry is expected to return to profitability in 2023, financial performance across regions has varied.
Middle East carriers are expected to earn $2 billion this year, compared with an estimated $1.4 billion in 2022, Iata data shows.
“The region’s return to profitability in 2022 was supported by a significant increase in the passenger load factor of almost 25 percentage points, outstripping the performance of the other regions,” Iata said.
“At the same time, Middle East carriers have been swiftly rebuilding their international networks and in March 2023, the region’s international connectivity had returned to 98 per cent of its pre-Covid level.”
Emirates airline will host the 80th annual general meeting of Iata in Dubai next year on June 2 to June 4.
Global state-owned investor ranking by size
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Sholto Byrnes on Myanmar politics
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Major honours
ARSENAL
BARCELONA
- La Liga - 2013
- Copa del Rey - 2012
- Fifa Club World Cup - 2011
CHELSEA
- Premier League - 2015, 2017
- FA Cup - 2018
- League Cup - 2015
SPAIN
- World Cup - 2010
- European Championship - 2008, 2012
The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
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Engine: naturally aspirated 6.5-liter V12
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Total eligible population
About 57.5 million people
51.1 million received a jab
6.4 million have not
Where are the unvaccinated?
England 11%
Scotland 9%
Wales 10%
Northern Ireland 14%
Sting & Shaggy
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The biog
Family: He is the youngest of five brothers, of whom two are dentists.
Celebrities he worked on: Fabio Canavaro, Lojain Omran, RedOne, Saber Al Rabai.
Where he works: Liberty Dental Clinic
Kathryn Hawkes of House of Hawkes on being a good guest (because we’ve all had bad ones)
- Arrive with a thank you gift, or make sure you have one for your host by the time you leave.
- Offer to buy groceries, cook them a meal or take your hosts out for dinner.
- Help out around the house.
- Entertain yourself so that your hosts don’t feel that they constantly need to.
- Leave no trace of your stay – if you’ve borrowed a book, return it to where you found it.
- Offer to strip the bed before you go.
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Killing of Qassem Suleimani
Profile
Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari
Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
Investors: Series A - Audacia Capital
Sector of operation: Transport
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Three stars
SPEC%20SHEET%3A%20APPLE%20IPHONE%2014
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How being social media savvy can improve your well being
Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.
Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.
Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.
Torrena said that “most people believe that dieting and keeping fit is boring”.
However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.
“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.
People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.
Barbie
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