Geneva. 06 December 2022. The International Air Transport Association (IATA) expects
a return to profitability for the global airline industry in 2023 as airlines continue to cut losses
stemming from the effects of the COVID-19 pandemic to their business in 2022.

  •  In 2023, airlines are expected to post a small net profit of $4.7 billion—a 0.6% net
    profit margin. It is the first profit since 2019 when industry net profits were $26.4
    billion (3.1% net profit margin).
  •  In 2022, airline net losses are expected to be $6.9 billion (an improvement on the $9.7
    billion loss for 2022 in IATA’s June outlook). This is significantly better than losses
    of $42.0 billion and $137.7 billion that were realized in 2021 and 2020 respectively.

“Resilience has been the hallmark for airlines in the COVID-19 crisis. As we look to 2023,
the financial recovery will take shape with a first industry profit since 2019. That is a great
achievement considering the scale of the financial and economic damage caused by
government imposed pandemic restrictions. But a $4.7 billion profit on industry revenues of
$779 billion also illustrates that there is much more ground to cover to put the global industry
on a solid financial footing. Many airlines are sufficiently profitable to attract the capital
needed to drive the industry forward as it decarbonizes. But many others are struggling for a
variety of reasons. These include onerous regulation, high costs, inconsistent government
policies, inefficient infrastructure and a value chain where the rewards of connecting the
world are not equitably distributed,” said Willie Walsh, IATA’s Director General.
Improved prospects for 2022 stem largely from strengthened yields and strong cost control in
the face of rising fuel prices.
Passenger yields are expected to grow by 8.4% (up from the 5.6% anticipated in June).
Propelled by that strength, passenger revenues are expected to grow to $438 billion (up from
$239 billion in 2021).
Air cargo revenues played a key role in cutting losses with revenues expected to reach $201.4
billion. That is an improvement compared with the June forecast, largely unchanged from
2021, and more than double the $100.8 billion earned in 2019.
Overall revenues are expected to grow by 43.6% compared to 2021, reaching an estimated
$727 billion.
Most other factors evolved in a negative manner following a downgrade of GDP growth
expectations (from 3.4% in June to 2.9%), and delays in removing COVID-19 restrictions in
several markets, particularly China. IATA’s June forecast anticipated that passenger traffic
would reach 82.4% of pre-crisis levels in 2022, but it now appears that the industry demand
recovery will reach 70.6% of pre-crisis levels. Cargo, on the other hand, was anticipated to
exceed 2019 levels by 11.7%, but that is now more likely be moderated to 98.4% of 2019

On the cost side, jet kerosene prices are expected to average $138.8/barrel for the year,
considerably higher than the $125.5/barrel expected in June. That reflects higher oil prices
exaggerated by a jet crack spread that is well-above historic averages. Even with lower
demand leading to reduced consumption, this raised the industry’s fuel bill to $222 billion
(well above the $192 billion anticipated in June).
“That airlines were able to cut their losses in 2022, in the face of rising costs, labor shortages,
strikes, operational disruptions in many key hubs and growing economic uncertainty speaks
volumes about peoples’ desire and need for connectivity. With some key markets like China
retaining restrictions longer than anticipated, passenger numbers fell somewhat short of
expectation. We’ll end the year at about 70% of 2019 passenger volumes. But with yield
improvement in both cargo and passenger businesses, airlines will reach the cusp of
profitability,” said Walsh.
In 2023 the airline industry is expected to tip into profitability. Airlines are anticipated to earn
a global net profit of $4.7 billion on revenues of $779 billion (0.6% net margin). This
expected improvement comes despite growing economic uncertainties as global GDP growth
slows to 1.3% (from 2.9% in 2022).
“Despite the economic uncertainties, there are plenty of reasons to be optimistic about 2023.
Lower oil price inflation and continuing pent-up demand should help to keep costs in check
as the strong growth trend continues. At the same time, with such thin margins, even an
insignificant shift in any one of these variables has the potential to shift the balance into
negative territory. Vigilance and flexibility will be key,” said Walsh.
Main Drivers
Passenger: The passenger business is expected to generate revenues of $522 billion.
Passenger demand is expected to reach 85.5% of 2019 levels over the course of 2023. Much
of this expectation takes into account the uncertainties of China’s Zero COVID policies
which are constraining both domestic and international markets. Nonetheless, passenger
numbers are expected to surpass the four billion mark for the first time since 2019, with 4.2
billion travellers expected to fly. Passenger yields, however, are expected to soften (-1.7%) as
somewhat lower energy costs are passed through to the consumer, despite passenger demand
growing more quickly (+21.1%) than passenger capacity (+18.0%).
Cargo: Cargo markets are expected to come under increased pressure in 2023. Revenues are
expected to be $149.4 billion, which is $52 billion less than 2022 but still $48.6 billion
stronger than 2019. With economic uncertainty, cargo volumes are expected to decrease to
57.7 million tonnes, from a peak of 65.6 million tonnes in 2021. As belly capacity grows in
line with the recovery in passenger markets, yields are expected to take a significant step
back. IATA expects a fall of 22.6% in cargo yields, mostly in the latter part of the year when
the impact of inflation-cooling measures are expected to bite. To put the yield decline in
context, cargo yields grew by 52.5% in 2020, 24.2% in 2021 and 7.2% in 2022. Even the
sizable and expected decline leaves cargo yields well-above pre-COVID levels.

Costs: Overall costs are expected to grow by 5.3% to $776 billion. That growth is expected
to be 1.8 percentage points below revenue growth, thus supporting a return to profitability.
Cost pressures are still there from labor, skill and capacity shortages. Infrastructure costs are
also a concern.
Nonetheless, non-fuel unit costs are expected to fall to 39.8 cents/available tonne kilometer
(down from 41.7 cents/ATK in 2022 and nearly matching the 39.2 cents/ATK achieved in
2019). Airline efficiency gains are expected to drive passenger load factors to 81.0 %, just
slightly below the 82.6% achieved in 2019.
The total fuel spends for 2023 is expected to be $229 billion—consistent at 30% of expenses.
IATA’s forecast is based on Brent crude at $92.3/barrel (down from an average of
$103.2/barrel in 2022). Jet kerosene is expected to average $111.9/barrel (down from
$138.8/barrel). This decrease reflects a relative stabilization of fuel supply after the initial
disruptions from the war in Ukraine. The premium charged for jet fuel (crack spread) remains
near historical highs.
Risks: The economic and geopolitical environment presents several potential risks to the
2023 outlook.
 While indications are that there could be an easing of aggressive inflation-fighting
interest rate hikes from early 2023, the risk of some economies falling into recession
remains. Such a slowdown could affect demand for both passenger and cargo
services. It would, however, likely come with some mitigation in the form of lower oil
 The outlook anticipates a gradual re-opening of China to international traffic and the
easing of domestic COVID-19 restrictions progressively from the second half of
2023. A prolongation of China’s Zero COVID policies would adversely affect the
 If materialized, proposals for increased infrastructure charges or taxes to support
sustainability efforts could also eat away at profitability in 2023.
“The job of airline managements will remain challenging as careful watch on economic
uncertainties will be critical. The good news is that airlines have built flexibility into their
business models to be able to handle the economic accelerations and decelerations impacting
demand. Airline profitability is razor thin. Each passenger carried is expected to contribute on
average just $1.11 to the industry’s net profit. In most parts of the world that’s far less than
what is needed to buy cup of coffee. Airlines must remain vigilant to any increases in taxes or
infrastructure fees. And we’ll need to be particularly wary of those made in the name of
sustainability. Our commitment is to net zero CO2 emissions by 2050. We’ll need all the
resources we can muster, including government incentives, to finance this enormous energy
transition. More taxes and higher charges would be counter-productive,” said Walsh.
Regional Round Up
All regions’ financial performance continues to improve since the depth of the pandemic
losses seen in 2020. North America is the only region to return to profitability in 2022, based

on our estimates. Two regions will join ranks with North America in this respect in 2023:
Europe and the Middle East, while Latin America, Africa, and Asia-Pacific will remain in the
North American carriers are expected realize profits of $9.9 billion in 2022 and $11.4
billion in 2023. In 2023, passenger demand growth of 6.4% is expected to outpace capacity
growth of 5.5%. Over the year, the region is expected to serve 97.2% of pre-crisis demand
levels with 98.9% of pre-crisis capacity.
Carriers in the region benefitted from fewer and shorter-lasting travel restrictions than many
other countries and regions. This boosted the large US domestic market, as well as
international travel, notably across the Atlantic.
European carriers are expected to see a loss of $3.1 billion in 2022, and a profit of $621
million in 2023. In 2023, passenger demand growth of 8.9% is expected to outpace capacity
growth of 6.1%. Over the year, the region is expected to serve 88.7% of pre-crisis demand
levels with 89.1% of pre-crisis capacity.
The war in Ukraine has curtailed the activities of some of the region’s carriers. Operational
disruptions at some of the continent’s hubs are being resolved, but labor unrest continues at
various locations.
Asia-Pacific carriers are expected to post a loss of $10.0 billion in 2022, narrowing to a $6.6
billion loss in 2023. In 2023, passenger demand growth of 59.8% is expected to outpace
capacity growth of 47.8%. Over the year, the region is expected to serve 70.8% of pre-crisis
demand levels with 75.5% of pre-crisis capacity.
Asia-Pacific is critically held back by the impact of China’s zero COVID policies on travel
and the region’s losses are largely skewed by the performance of China’s airlines who face
the full impact of this policy in both domestic and international markets. Taking a
conservative view of progressive easing of restrictions in China over the second half of 2023,
we nevertheless expect strong pent-up demand to fuel a quick rebound in the wake of any
such moves. The region’s performance receives a significant boost from profitable air cargo
markets, in which it is the largest player.
Middle East carriers are expected to post a loss of $1.1 billion in 2022, and a profit of $268
million in 2023. In 2023, passenger demand growth of 23.4% is expected to outpace capacity
growth of 21.2%. Over the year, the region is expected to serve 97.8% of pre-crisis demand
levels with 94.5% of pre-crisis capacity.
The region has benefitted from a certain degree of re-routing resulting from the war in
Ukraine, and more significantly so from the pent-up travel demand using the region’s
extensive global networks as international travel markets re-opened.
Latin American carriers are expected to post a loss of $2.0 billion in 2022, reducing to
$795 million in 2023. In 2023, passenger demand growth of 9.3% is expected to outpace
capacity growth of 6.3%. Over the year, the region is expected to serve 95.6% of pre-crisis
demand levels with 94.2% of pre-crisis capacity.

Latin America has shown buoyancy over the year, largely owing to the fact that many
countries began lifting their COVID-19 travel restrictions since mid-year.
African carriers are expected to post a loss of $638 million in 2022, narrowing to a loss of
$213 million in 2023. Passenger demand growth of 27.4% is expected to outpace capacity
growth of 21.9%. Over the year, the region is expected to serve 86.3% of pre-crisis demand
levels with 83.9% of pre-crisis capacity.
Africa is particularly exposed to macro-economic headwinds which have increased the
vulnerability of several economies and rendered connectivity more complex.
Bottom Line
“The expected profits for 2023 are razor thin. But it is incredibly significant that we have
turned the corner to profitability. The challenges that airlines will face in 2023, while
complex, will fall into our areas of experience. The industry has built a great capability to
adjust to fluctuations in the economy, major cost items like fuel prices, and passenger
preference. We see this demonstrated in the decade of strengthening profitability following
the 2008 Global Financial Crisis and ending with the pandemic. And encouragingly, there are
plenty of jobs and the majority of people are confident to travel even with an uncertain
economic outlook,” said Walsh.
Passengers are taking advantage of the return of their freedom to travel. A recent IATA poll
of travellers in 11 global markets revealed that nearly 70% are traveling as much or more
than they did prior to the pandemic. And, while the economic situation is concerning to 85%
of travellers, 57% have no intention to curb their travel habits.
The same study also demonstrated the important role that travelers see the airline industry
 91% said that connectivity by air is critical to the economy
 90% said that air travel is a necessity for modern life
 87% said that air travel has a positive impact on societies, and
 Of the 57% familiar with the UN Sustainable Development Goals (SDGs), 91%
understand that air transport is a key contributor