IATA Anticipates Significant Rise in Airline Profits in 2024
The International Air Transport Association (IATA) anticipates a significant rise in airline profits in 2024, as per Alkhaleej. It noted considerable stability in 2023, despite global net profits staying below capital costs for both years. There’s also a continuing disparity in financial performance across different regions.
Projected Increase in Net Profits
IATA predicts the aviation sector’s net profits will reach $25.7 billion in 2024, a slight improvement over 2023’s expected $23.3 billion. This equates to a net profit margin of 2.7% in 2024, marginally higher than 2.6% in 2023.
Challenges in Capital Returns
Return on invested capital will probably lag behind capital costs by 4 percentage points in 2023 and 2024. This shortfall is due to rising global interest rates in response to sharp inflation increases.
Growth in Operating Profits and Revenues
The association expects the aviation sector’s operating profits to rise from $40.7 billion in 2023 to $49.3 billion in 2024. Total revenues are expected to grow by 7.6% annually in 2024, reaching $964 billion, with costs growing slightly less, at 6.9%, to $914 billion.
Moreover, the association expects that the passenger numbers will reach a record 4.7 billion in 2024, surpassing pre-COVID-19 levels. Air cargo volume is expected to hit 58 million tons in 2023 and 61 million tons in 2024.
Middle East’s Financial Performance
The association expects that the Middle East will show strong financial performance in 2023 and 2024. Airlines in the region are rapidly rebuilding international networks and restoring their hub positions. Capacity rates in 2024 might grow faster than demand rates, slightly increasing the net profit margin due to more efficient aircrafts.
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