News
Airline executives optimistic about improving profitability in 2022
November 12th 2021
Almost three quarters of airline chief financial officers (CFOs) and heads of cargo taking part in the latest International Air Transport Association (IATA) business confidence survey are expecting improving bottom lines in the next 12 months. Read More » The high level of optimism comes after 85% of CFOs surveyed reported increasing profits or smaller losses in October, up from 72% previously. Respondents listed strong cargo traffic, fewer travel restrictions and a rebound in passenger revenue from a very low base as supporting their businesses. Those reporting a downturn cited labour challenges and renewed travel restrictions as issues. IATA said the ongoing confidence, undiminished since July, suggests the upward trend in profitability may continue. “Moreover, several of the airlines that expect no changes do so because they already are in a strong position, often due to air cargo,’’ it said. On the passenger front, 86% of surveyed airlines recorded increases in year-on-year third-quarter demand. Most were optimistic about the next 12 months and expected demand to return as travel restrictions eased, making more destinations available and resulting in a more predictable environment. Cargo optimism also was high with 73% of respondents expecting air cargo volumes to continue trending upwards in the coming year despite already elevated levels. While there were some positive signs from respondents on employment levels, the survey found workforces remain significantly smaller than before the crisis. However, only 6% expected more job losses, down from 15% in the second quarter. Higher fuel prices and the prospect of inflation were worrying some executives with 44% anticipating an increase, up from 30% previously. A thin majority (52%) of surveyed airlines posted year-on-year increases in passenger yields in the third quarter and several said demand was not yet strong enough to raise fares. Nonetheless, 54% anticipated an increase in the next 12 months. On the cargo side, respondents pointed to strong yields, both in recent months and looking forward. “Combined with strong cargo volumes, this indicates cargo revenues are expected to remain very supportive for airlines in the next 12 months,’’ the report said.
