Airlines will be making money again in 2023 as travel recovers

The global airline industry is expected to return to profitability in 2023 for the first time in four years.

In a forecast released Tuesday, the International Air Transport Association predicted that airlines will earn a net profit of $4.7 billion, despite fears of a global recession.

It would mark the first time the sector has made money since 2019, as fliers return to the skies after years of Covid-19 restrictions reduced demand for flights.

Aircraft grounded due to the COVID-19 pandemic, including planes operated by Ryanair, are pictured on the apron at Manchester Airport in Manchester, north west England on May 1, 2020. - Irish low-cost carrier Ryanair said on Friday it planned to axe 3,000 pilot and cabin crew jobs, or 15 percent of staff, with air transport paralysed by coronavirus. Dublin-based Ryanair added in a statement that most of its flights would remain grounded until at least July and predicted it would take until summer 2022 at the earliest before passenger demand recovers. (Photo by Oli SCARFF / AFP) (Photo by OLI SCARFF/AFP via Getty Images)

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The industry association also said net losses for 2022 were expected to be $6.9 billion. That’s less than it had previously forecast and “significantly better” than both 2021 and 2020.

Willie Walsh, the director general of IATA, called the projection “a great achievement.” But the industry still has work to do to shore up its financial position, he emphasized.

“A $4.7 billion profit on industry revenues of $779 billion also illustrates that there is much more ground to cover to put the global industry on a solid financial footing,” he said.

Consumer demand for air travel has been boosted by the reopening of borders closed by the pandemic, as well as a strong US dollar that’s encouraged more Americans to travel overseas. Corporate travel has also been making a comeback.

LOS ANGELES, CALIFORNIA - JUNE 30: Delta Air Lines pilots picket at Los Angeles International Airport (LAX) during a protest over the union contract, which was held at airports across the country, on June 30, 2022 in Los Angeles, California. The pilots held informational pickets over stalled contract talks ahead of the busy July 4th travel weekend. (Photo by Mario Tama/Getty Images)

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At the same time, constraints remain on the supply of flights, including delayed plane deliveries, pilot shortages and airport infrastructure issues.

Nonetheless, the industry is increasingly optimistic even as a global economic downturn looms.

“While we are mindful of macroeconomic headwinds, the travel industry is experiencing a counter-cyclical recovery,” Delta Air Lines CEO Ed Bastian said when delivering the company’s earnings results in October.

“Global demand is continuing to ramp [up] as consumers shift spend to experiences, businesses return to travel and international markets continue to reopen.”

— Chris Isidore contributed reporting.