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Airlines see the end of the covid-19 tunnel

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Optimistic again after two and a half years of covid-19, airlines expect to cut their losses this year and return to profitability in 2023, thanks to the strong recovery in passenger demand.

The sector is yet to lose $9.7 billion this year, as forecast, but this will be a “huge improvement” on the $137.7 billion lost in 2020 and the $42.1 billion lost in 2021, according to the International Air Transport Association (IATA). ).

“Industry-wide profitability in 2023 appears to be within reach, while (carriers) in North America should make an $8.8 billion profit from 2022,” IATA, which represents the large industry, said in a statement. most of the world’s airlines and which holds its annual general meeting in Doha.

In addition, “strong latent demand, the lifting of movement restrictions in most markets, low unemployment in most countries and the economies of individuals are fueling a recovery that will result in passenger numbers reaching 83% of the pre-pandemic level” this year, the organization said.

IATA estimates that passenger traffic will return to pre-crisis levels in 2024.

The health crisis, whose effects were felt as of March 2020, torpedoed the airline sector, which lost 60% of its customers this year. In 2021, the number of passengers had only recovered up to 50% from the 4,500 million passengers managed in 2019.

In terms of turnover, companies expect to recover 93.3% of 2019 levels in 2022. At 782 billion dollars, this will represent an increase of 54.5% in one year.

This increase will be driven by passenger transport revenues, which will “more than double” year-on-year to $498 billion, while freight revenues will fall slightly to $191 billion from $204. from the previous year, but will still “double” the level of 2019.

Freight transport has been one of the airline industry’s few strengths during the crisis.

– “Risk factor’s” –
Throughout the sector, “there is optimism, although there are still challenges in terms of costs, in particular kerosene, and persistent restrictions in some key markets,” said IATA Director General Willie Walsh, quoted in the text.

The invasion of Ukraine by Russia and the sanctions against Moscow sent hydrocarbon prices skyrocketing. Fuel will represent 24% of airline costs in 2022, against 19% in 2021, according to IATA.

The organization identified several “risk factors” that could alter its forecasts, first of all the war in Ukraine. The closure of Russian airspace to many carriers forces them to take costly detours on routes between Asia and Europe or the United States.

Another operational challenge is the problems at hand due to the shortage of pilots in the United States, maintenance personnel and security agents in some European airports, a phenomenon that IATA hopes will disappear in the coming months.

Then there is the high inflation that erodes the purchasing power of consumers.

Weakened by the crisis, airlines must now clean up their finances and invest massively to reduce their net CO2 emissions to zero by 2050, a goal recalled on Monday by Iata.

Although covid-19 is not at the forefront of concerns, the pandemic continues and the appearance of new variants could cause new border closures, fears IATA, which estimates that it is not “an effective means of controlling contagion”.

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