Aviation Business News

IATA AGM 2024: Aviation’s financial achievement hailed but challenges remain to sustainability and profitability

IATA has hailed the airline industry’s financial performance as a “major achievement” considering where it was three years ago during the height of the pandemic.

Although new profits are expected to his $30.5 billion in 2024, up from $27.4 billion in 2023, IATA director general Willie Walsh warned the sector continues to offer poor return on invested capital.

Speaking at the IATA AGM in Dubai this week, Walsh told delegates that aviation retains £6.14 per passenger in profit, the cost of an espresso coffee in the AGM host hotel.

This compared to high street coffee chain Starbucks which enjoys $11.5 of retained profit per customer. Aviation’s 3.1% net profit margin is down on the record 5% is achieved in 2017/18.

Walsh said the expected 5.7% return on invested capital in 2024 is 3.4 percentage points below the average cost of capital across all sectors of business.

He said: “In a world of many and growing uncertainties, airlines continue to shore-up their profitability.

“The expected aggregate net profit of $30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses.

“With a record five billion air travellers expected in 2024, the human need to fly has never been stronger.

“Moreover, the global economy counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air.

“Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience is important.

“Profitability enables investments in products to meet the needs of our customers and in the sustainability solutions we will need to achieve net zero carbon emissions by 2050.”

In 2024, total revenues in the aviation sector are forecast to hit a record high of $996 billion (up 9.7%),while the number of passengers globally will also be a record high at 4.96 billion.

However, total expenses incurred by the industry will also be a record high of $936 billion (up 9.4%) and Walsh warned governments not to see aviation as a source for more tax income.

“Governments who love to look to our industry for tax revenues need to understand that our margins are wafer thin. We deserve to celebrate the hard work that has brought our industry back from the brink.”

Walsh saif the industry remains squeezed by fierce competition, supply chain issues, which he said do not appear to have got any worse, and regulation. He said there is plenty standing in the way of the industry becoming more sustainable and profitable.

Walsh added: “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%. And earning just $6.14 per passenger is an indication of just how thin our profits are—barely enough for a coffee in many parts of the world.

“To improve profitability, resolving supply chain issues is of critical importance so we can deploy fleets efficiently to meet demand. And relief from the parade of onerous regulation and ever-increasing tax proposals would also help.

“An emphasis on public policy measures that drive business competitiveness would be a win for the economy, for jobs, and for connectivity. It would also place us in a strong position to accelerate investments in sustainability.”

Sign In

Lost your password?