IATA Expects Latin American Airlines To remain IN Red in 2024

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By LatAm Reports Editor

Latin America and Africa will be the only regions still in red numbers in 2024, according to report.

Passenger and cargo traffic will continue in red numbers on the Latin American market both in 2023, with losses of 600 million dollars, and in 2024, when they will amount to 400 million, according to forecasts published by the International Air Transport Association (IATA).

Losses will continue, however, to decline from the worst moments of the pandemic (they were in the region of $7 billion in 2021 and $3.9 billion in 2022), according to the annual report presented today at the IATA headquarters at Geneva Airport.

“Although some of the markets in the region show strength, in the case of Mexico, others face economic and social instability affecting airline figures,” analyzed the world’s leading airline organization.

According to the report, Asia-Pacific, Latin America and Africa will be, as in 2022, the only regions in losses in 2023, and the last two will be the only ones still in red numbers in 2024.

In contrast, IATA expects the U.S. airlift market to make $14.3 billion in profits by 2023 (and $14.4 billion in 2024), while in Europe it would amount to $7.7 billion this year and $7.9 billion the next.

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Another region with profits would be the Middle East, with profits of $2.6 billion in 2023 and $3.1 billion in the next financial year, always according to IATA forecasts.

The benefits return

Airlines will achieve a total net profit of $23.3 billion in 2023, the first since the covid-19 pandemic that began in 2020, and these will increase by 2024 to $25.7 billion, according to the forecast published by the International Air Transport Association (IATA).

The air transport sector, one of the hardest hit during the pandemic by restrictions on movement ordered in almost the world, lost $137.7 billion in 2020, $41 billion in 2021 and still $3.8 billion in 2022.

Revenue this year will total $896 billion, an annual increase of 21.7 percent and a figure for the first time higher than in 2019 ($838 billion), according to statistics published by the main global airline association at its annual press session, held at Geneva Airport. In 2024, revenue would rise another 7.6 per cent to $964 billion.

In 2023 $642 billion of that revenue will come from passenger transport and $134.7 billion of cargo, while in 2024 the figures will be $717 billion and $111.4 billion, respectively.

The costs this year will be $855 billion, an increase of 18.1 per cent over 2022, and will rise to $914 billion in 2024, 6.9 per cent year-on-year.

“Considering the huge losses of recent years, the net profit of $25.7 billion expected in 2024 is a prize for aviation resilience,” said IATA CEO Willie Walsh.

“People love travelling and this has helped airlines get back to the connectivity levels that existed before the pandemic, with extraordinary speed but which has cost the sector four years of growth,” he said.

IATA projects that in 2024 some 4.7 billion people will travel by plane, a historic peak that would exceed the last year before the pandemic, 2019 (4.5 billion).

Walsh stressed that current growth margins (from 2.7 per cent at 2024) are still below what investors expected.

“On average, airlines make $5.45 per passenger, enough to buy a coffee at the Starbucks at London Airport, but insufficient to build a future resilient to the problems an industry that can face an industry of 3.5 per cent of global GDP,” he said.

The sector expects the fall in inflationary tensions to benefit its finances, as well as low global unemployment rates and strong demand, although it points out that there are risks that could affect its 2024 figures, such as the possible brake on the economy in China, with high levels of youth unemployment and pressures in its powerful real estate sector.

With regard to current conflicts, such as Ukraine or the war between Israel and Hamas, IATA states that its adverse effects on the sector have been limited by changing routes through the affected airspace.

On the contrary, they have led to increases in fuel prices that have had an effect on the rising costs for airlines.

“A peace that is difficult in these conflicts could bring benefits to the industry, but on the other hand an escalation could produce a radically scenario to which aviation would not be immune,” the annual report said.

This article has been translated from the original which first appeared in Pan America