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IATA Raises 2024 Net Profit Forecast for Airlines to US$30.5 Bil

KUALA LUMPUR: The International Air Transport Association (IATA) has upgraded its 2024 profitability projections for airlines to US$30.5 billion (RM143.16 billion) in net profit compared to the US$25.7 billion (RM120.63 billion) forecast made in December 2023.

It said the improved profitability is also estimated to be higher than 2023’s US$27.4 billion (RM128.61 billion).

IATA said North America continues to be the most significant contributor to industry profits, supported by a high passenger load factor, robust yields and strong consumer spending despite cost-of-living pressure.

Meanwhile, Asia Pacific is expected to be responsible for half of the world’s revenue passenger kilometres (RPK) growth in 2024, driven largely by recovering domestic markets in China, Japan and Australia.

“International travel in the region remains subdued, especially China where it is still below pre-Covid levels.

“This indicates that there is still a lot of pent-up demand for cross-border travel in the region, which will likely boost future growth prospects,” IATA said, forecasting revenue in 2024 to hit a new high of US$996 billion (RM4.67 trillion).

“Passenger revenues are expected to reach US$744 billion (RM3.49 trillion) in 2024, up 15% from US$646 billion (RM3.03 trillion) in 2023 with RPK growth expected to be 11.6% year-on-year,” it said.

In contrast, cargo revenues are expected to fall to US$120 billion (RM563.2 billion) in 2024 from US$138 billion (RM647.7 billion) in 2023.

“Despite the strength of demand, cargo yields are expected to fall 17.5% in 2024 while remaining slightly above 2019 levels.

“This is normalisation after extraordinary pandemic highs. A key factor in this is the significant belly capacity that entered the market in 2023 in tandem with the recovery of passenger travel,” it stated.

Overall, IATA projected total travellers to reach a new record of 4.96 billion this year, while total air cargo volumes are expected to reach 62 million tonnes in 2024.

Meanwhile, the operating profits of airlines are expected to reach US$59.9 billion (RM281.1 billion) in 2024, up from an estimated US$52.2 billion (245.02 billion) in 2023.

IATA said an aggregate return above the cost of capital, however, continues to elude the global airline industry.

It said the return on invested capital in 2024 is expected to be 5.7%, which is about 3.4 percentage points below the average cost of capital.

“The airline industry is on the path to sustainable profits, but there is a big gap still to cover. A 5.7% return on invested capital is well below the cost of capital, which is over 9%.

“Earning just US$6.14 (RM28.82) per passenger is an indication of just how thin our profits are. It is barely enough for a coffee in many parts of the world,” said IATA Director-General Willie Walsh.

On top of that, jet fuel is expected to average US$113.8 (RM534.18) per barrel in 2024, translating into a total fuel bill of US$291 billion (RM1.36 trillion), accounting for 31% of all operating costs.

IATA added that high crude oil prices are expected to continue to be further exaggerated for airlines as the crack spread (premium paid to refine crude oil into jet fuel) is expected to average 30% in 2024.


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