World airline outlook: IATA raises profit forecast, but returns remain weak

On 3-Jun-2024 the International Air Transport Association (IATA) published improved airline industry profit forecasts for 2024 and also revised its 2023 estimates upwards. This is the result of strong demand, still benefitting from the post-COVID overhang of consumer enthusiasm for flying. This is driving revenue growth faster than cost growth, according to IATA.

However, margins are thin - the net profit margin is expected to be just 3.1% - and the industry remains unable to generate a return on capital that meets its cost of capital. As post-pandemic pent-up demand starts to soften, generating a sufficient return will become yet more challenging.

This further supports CAPA - Centre for Aviation's view that airline industry structure must change in the direction of greater consolidation to drive returns up.

This will need policy changes from governments and regulators.