Airlines have more than doubled their profit forecasts for 2023 as the travel industry cashes in on post-pandemic demand.
The International Air Transport Association (IATA) said it expects profits to total £8bn this year – up from a previous target of £3.8billion – after a number of airlines posted buoyant updates in recent weeks.
Although a cost of living crisis has put pressure on many households, the summer holiday season is set to be a blockbuster for carriers including British Airways, Virgin Atlantic, Easyjet and Ryanair.
Profits are expected to soar after airlines raked in £2.9billion last year, when they started on the road to recovery after the pandemic’s devastating hit to business.
‘The pandemic years are behind us and borders are open as normal,’ said IATA director general Willie Walsh, the former boss of Aer Lingus and British Airways.
Take-off: The International Air Transport Association said it expects profits to total £8bn this year – up from a previous target of £3.8bn
Speaking at the group’s annual meeting in Istanbul, the industry veteran added: ‘Resilience is the story of the day and there are many good reasons for optimism.
‘Achieving profitability at an industry level after the depths of the Covid-19 crisis opens up much potential for airlines to reward investors, fund sustainability and invest in efficiencies to connect the world even more effectively.
‘Economic uncertainties have not dampened the desire to travel, even as ticket prices absorbed elevated fuel costs.’
Travel restrictions left airlines languishing in 2020 and 2021, when the sector racked up losses of £111billion and £34billion respectively. Industry profits peaked at £30billion in 2017, while revenues hit a record high of £675billion in 2019, the year before the pandemic struck.
IATA predicted that total revenues would grow 9.7 per cent this year to £646billion in 2023.
The number of passengers is expected to almost recover to pre-pandemic levels, with 4.35bn people forecast to travel in 2023, closing in on the 4.54bn seen in 2019.
Ryanair swung back into the black with a £1.2billion profit last year and forecast an even-better performance in 2023.
In a further boost to the industry, the first British Airways flight between London Heathrow and Beijing since Covid struck took off yesterday.
The route was suspended at the start of the pandemic three years ago. Virgin Atlantic also announced that new flights from London to Sao Paulo in Brazil and Bangalore in India would start next year.
The industry has faced challenges including elevated fuel costs and disruptions in the aircraft parts supply chain.
But despite the optimism, Easyjet shares fell 0.2 per cent yesterday, while BA-owner IAG dropped 0.4 per cent.
