Airways ought to finish 2022 with a lack of US$ 2 billion in Latin America
- December 7, 2022
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Sector should have first global profit after the pandemic in 2023
Airlines in Latin America should have a combined loss of US$ 2 billion (R$ 10.5 billion) in 2022 and lose another US$ 795 million (R$ 4.1 billion) in losses in 2023, predicts IATA ( International Air Transport Association).
The loss in the region this year will represent 2.4% of revenues, a percentage that should be reduced to 0.6% next year. For Latin America, the entity projects that passenger demand will grow by 9.3%, and that the total number of passengers transported will reach 95.6% of what was registered before the pandemic.
IATA released its forecasts for the air market this Tuesday (6). The expectation is that the sector as a whole will return to profit globally in 2023, for the first time since the pandemic.
The health crisis, which paralyzed flights worldwide, generated a loss of US$ 137.7 billion in 2020. This year, global sector losses should close at US$ 6.7 billion. For 2023, IATA projects that airlines earn a global profit of US$ 4.7 billion, which will represent 0.4% of revenues. In 2019, profit was $26.4 billion (3.1% margin).
“After you lose $137 billion in a year, any profit is welcome,” says Willie Walsh, IATA’s director general, trying to sound optimistic. “Lower fuel price inflation should help keep costs in check. At the same time, with such tight margins, even an insignificant change in any variable has the potential to put the balance sheet in negative territory”, he analyzes.
The airline industry is expected to end 2022 at a loss in all regions of the world, with the exception of North America. There, they should earn US$ 9.9 billion, margin of 2.4%.
In 2023, Europe and the Middle East should also come out of the red, but still with small profits, of up to 0.6% of revenues. In addition to Latin America, Africa and the Asia-Pacific area will continue to suffer losses.
By 2022, total passenger demand on the planet is expected to reach 70.6% of the pre-pandemic level. IATA reduced its previous forecast, from June, which pointed to an 82.4% recovery in demand this year.
This year, the sector was affected by several problems, such as strikes by workers in Europe, a lack of pilots in the USA, restrictions due to Covid in China and the effects of the War in Ukraine, such as the ban on flights over Russia and, mainly, the high global fuel price.
QAV (Aviation Kerosene) is the biggest cost for companies. The average price per barrel should close this year at US$ 138. In 2020, it cost US$ 46. “If the price of oil goes up, the price of tickets will have to go up too”, says Walsh. “We cannot absorb these extra costs.”
“The data shows that there is a long way to go to put the global industry on a solid financial footing. Many airlines are profitable, but many others are in trouble for a variety of reasons, including onerous regulations, high costs, inconsistent government policies, and inefficient infrastructure,” continues the director.
Walsh points out that there have been increases in fees charged by airports in several countries, and that there will likely be more readjustments in 2023, which could also put pressure on the cost of tickets.
In Brazil, the market for domestic flights has been recovering faster than for international destinations. The domestic air network for the summer of this year will have more destinations than in 2019, before the pandemic.