IATA chief sees balanced load factors as sign of sustainable recovery
IATA DG Willie Walsh believes load factors in the highly profitable third quarter for airlines illustrate capacity has been well-matched to demand and provides reason for optimism that recent profitability is sustainable even with economic headwinds ahead. Airlines enjoyed improved financial fortunes across the regions during the third quarter, as demand surged due to Covid border restrictions further easing. Notably, revenues in many cases were at or above 2019 highs, even though capacity was still not fully restored. That revenue increase was largely driven by higher yields, the result of ‘revenge travel’ demand as passengers were willing to pay higher fares having missed out on travel during the pandemic. Walsh though takes particular heart from the load factors, which he believes illustrates a sustainability about the industry performance. ”I think it is sustainable, because the average seat factor across the third quarter was still in the order of 82-83%, which is similar to what the industry was doing in 2019, actually slightly less than 2019,” Walsh said, speaking during the Airlines 2022 event in London on 21 November. ”So capacity and demand have been coming back at a fair pace,” he says, noting load factors would have been far higher if it was a case of demand being high because of a shortage of capacity. “I think the profitability for the quarter was good and important for the industry given the significant financial losses encountered in 2020 and 2021, and at an industry level 2022 will be more profitable.” he says. IATA will provide a fresh industry forecast in December, which will include its first outlook for 2023. The industry body’s most recent outlook, issued in June, is for collective losses to be cut to less than $10 billion this year and that an industry-wide profit for 2023 was “on the horizon” for the first time since 2019. “[There is] still a long way to go, particularly when you look at the damage to balance sheets in that period,” says Walsh. “But it is good to see a strong recovery, and despite the headwinds, we believe that recovery will continue into 2023.” <br/>
https://portal.staralliance.com/cms/news/hot-topics/2022-11-24/general/iata-chief-sees-balanced-load-factors-as-sign-of-sustainable-recovery
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IATA chief sees balanced load factors as sign of sustainable recovery
IATA DG Willie Walsh believes load factors in the highly profitable third quarter for airlines illustrate capacity has been well-matched to demand and provides reason for optimism that recent profitability is sustainable even with economic headwinds ahead. Airlines enjoyed improved financial fortunes across the regions during the third quarter, as demand surged due to Covid border restrictions further easing. Notably, revenues in many cases were at or above 2019 highs, even though capacity was still not fully restored. That revenue increase was largely driven by higher yields, the result of ‘revenge travel’ demand as passengers were willing to pay higher fares having missed out on travel during the pandemic. Walsh though takes particular heart from the load factors, which he believes illustrates a sustainability about the industry performance. ”I think it is sustainable, because the average seat factor across the third quarter was still in the order of 82-83%, which is similar to what the industry was doing in 2019, actually slightly less than 2019,” Walsh said, speaking during the Airlines 2022 event in London on 21 November. ”So capacity and demand have been coming back at a fair pace,” he says, noting load factors would have been far higher if it was a case of demand being high because of a shortage of capacity. “I think the profitability for the quarter was good and important for the industry given the significant financial losses encountered in 2020 and 2021, and at an industry level 2022 will be more profitable.” he says. IATA will provide a fresh industry forecast in December, which will include its first outlook for 2023. The industry body’s most recent outlook, issued in June, is for collective losses to be cut to less than $10 billion this year and that an industry-wide profit for 2023 was “on the horizon” for the first time since 2019. “[There is] still a long way to go, particularly when you look at the damage to balance sheets in that period,” says Walsh. “But it is good to see a strong recovery, and despite the headwinds, we believe that recovery will continue into 2023.” <br/>
