Global Airlines’ Profit Outlook Improves as Travel Demand Rises

An international trade group on Monday lifted 2024 profit forecasts for airlines thanks to strong travel demand.

Profit across the industry is projected to reach $30.5 billion this year, up from the estimated $27.4 billion airlines earned in 2023, according to the International Air Transport Association (IATA). The trade group initially projected $25.7 billion in 2024 profit last December.

Revenue is projected to grow 9.7% to a record of just under $1 trillion, while a record 4.96 billion total passengers are expected to fly this year. Passenger revenue is expected to jump 15.2% year-over-year to $744 billion in 2024, but cargo revenue is projected to drop 13% to $120 billion as it returns to normal levels after demand spiked during the pandemic.

Supply Chain Issues, Fuel Costs Impact Profitability as Travel Increases

However, profit margins are expected to remain low as the industry contends with high fuel prices and supply chain issues that have impacted deliveries from plane makers like Airbus and Boeing (BA) to airlines across the globe. Profit margin is forecast at just 3.1% for the year, albeit higher than the estimated 3.0% margin for 2023 and the 2.7% projection for 2024 made in December.

“The airline industry is on the path to sustainable profits, but there is a big gap still to cover,” IATA Director General Willie Walsh said. “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.”

Profit is expected to increase the most in the Asia-Pacific region, more than tripling to $2.2 billion from an estimated $600 million last year as domestic travel within China, Japan, and Australia continues to recover post-COVID, the IATA said.

Southwest Airlines (LUV) stock was 2.4% higher as of 1 p.m. ET Monday. Delta Air Lines (DAL) and United Airlines (UAL) were down 0.9% and 1.3%, respectively, while American Airlines (AAL) was little changed.