Middle East carriers' profits likely to reach $3.1 billion in 2024

Global aviation passengers numbers to exceed pre-pandemic levels next year


Somshankar Bandyopadhyay

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Emirates aircraft Dubai International Airport. — Reuters
Emirates aircraft Dubai International Airport. — Reuters

Published: Wed 6 Dec 2023, 6:09 PM

Last updated: Wed 6 Dec 2023, 6:10 PM

Middle Eastern carriers are expected to post a combined net profit of $3.1 billion in 2024, a rise of 4.8 per cent from 2023 estimates, the International Air Transport Association (IATA) said on Wednesday.

“The Middle East is expected to deliver a strong financial performance in both 2023 and 2024. The Middle East carriers have been swift to rebuild their international networks and restore their super-connector hubs. To that end, capacity is expected to grow faster than demand in 2024; however, with more efficient fleets, net profit margin has a potential to slightly increase,” the IATA said.

Revenue Passenger Kilometres (RPK) are expected to rise 6.3 per cent next year compared to 2023, while Available Seat Kilometres are expected to increase 10.7 per cent, the global aviation body noted.

Globally, some 4.7 billion people are expected to travel in 2024, an historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019, the IATA said.

Airline industry net profits are expected to reach $25.7 billion in 2024 (a 2.7 per cent net profit margin). That will be a slight improvement over 2023 which is expected to show a $23.3 billion net profit (2.6 per cent net profit margin).

Airline industry operating profits are expected to reach $49.3 billion in 2024 from $40.7 billion in 2023. Total revenues in 2024 are expected to grow 7.6 per cent year over year to a record $964 billion.

Expense growth is expected to be slightly lower at 6.9 per cent for a total of $914 billion.

“Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience. People love to travel and that has helped airlines to come roaring back to pre-pandemic levels of connectivity. The speed of the recovery has been extraordinary; yet it also appears that the pandemic has cost aviation about four years of growth. From 2024 the outlook indicates that we can expect more normal growth patterns for both passenger and cargo,” said Willie Walsh, IATA’s Director General.

“Industry profits must be put into proper perspective. While the recovery is impressive, a net profit margin of 2.7 per cent is far below what investors in almost any other industry would accept. Of course, many airlines are doing better than that average, and many are struggling. But there is something to be learned from the fact that, on average airlines will retain just $5.45 for every passenger carried. That’s about enough to buy a basic ‘grande latte’ at a London Starbucks. But it is far too little to build a future that is resilient to shocks for a critical global industry on which 3.5 per cent of GDP depends and from which 3.05 million people directly earn their livelihoods. Airlines will always compete ferociously for their customers, but they remain far too burdened by onerous regulation, fragmentation, high infrastructure costs and a supply chain populated with oligopolies,” said Walsh.

Overall revenues in 2024 are expected to rise faster than expenses (7.6 per cent vs. 6.9 per cent), strengthening profitability.

Industry revenues are expected to reach an historic high of $964 billion in 2024. An inventory of 40.1 million flights is expected to be available in 2024, exceeding the 2019 level of 38.9 million and up from the 36.8 million flights expected in 2023.

Looking ahead, 44 per cent passengers say that they will travel more in the next 12 months than in the previous 12 months. Only 7 per cent say they will travel less and 48 per cent expect to maintain similar levels of travel in the coming 12 months as in the previous 12 months.

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