Airline execs dismiss slowdown fears, say it is ‘best recession’ industry ever faced
Business is good for airlines, except where it’s not. That was the word in the halls and meeting rooms of the industry’s largest annual gathering, the IATA Annual General Meeting, this week. The organization has upped its airline financial outlook for the year to $22.4b in operating profits, a seven-fold increase from the $3.2b forecast in December. Lifted by continued travel demand strength and easing fuel prices. Full-year passenger traffic is expected to come in just 4% below its 2019 peak. “Despite economic uncertainties, people are flying to reconnect, explore, and do business,” IATA DG Willie Walsh said at the event in Istanbul. “Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability.” But behind bullish numbers is a turbulent backdrop. The corporate travel recovery has stalled, economic concerns persist, aircraft production issues and delays continue, and a shortage of spare parts and engines has some airlines scrambling. “In the U.S., we’re in a business recession, and consumer is just fine — consumer is strong,” United Airlines CEO Scott Kirby said in Istanbul. Corporate travel revenue from large, managed accounts, has plateaued in the U.S. at between 75 and 80% of 2019 levels based on comments from executives at American Airlines, Delta Air Lines, and United. The airlines are already looking beyond the current summer season for the next potential step up in business travel. But that does not mean things are bad. “If we’re in the middle of a recession, this is the best recession the airline industry has ever seen,” United CCO Andrew Nocella said. Asked about post-summer travel demand, when many think a slowdown could occur, and he pivoted from definitive comments to say United “remains optimistic” that it will meet its full-year pre-tax margin target of roughly 9%. Emirates President Tim Clark was much more confident that the rest of 2023 will be good for airlines. “For the next nine months we’re full. [But] what happens in 2024 is anyone’s guess,” he said. For example, a mild recession in global markets could negatively affect the recovery but an end to Russia’s war in Ukraine could be “another kickstart to the global economy.”<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-06-09/general/airline-execs-dismiss-slowdown-fears-say-it-is-2018best-recession2019-industry-ever-faced
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Airline execs dismiss slowdown fears, say it is ‘best recession’ industry ever faced
Business is good for airlines, except where it’s not. That was the word in the halls and meeting rooms of the industry’s largest annual gathering, the IATA Annual General Meeting, this week. The organization has upped its airline financial outlook for the year to $22.4b in operating profits, a seven-fold increase from the $3.2b forecast in December. Lifted by continued travel demand strength and easing fuel prices. Full-year passenger traffic is expected to come in just 4% below its 2019 peak. “Despite economic uncertainties, people are flying to reconnect, explore, and do business,” IATA DG Willie Walsh said at the event in Istanbul. “Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability.” But behind bullish numbers is a turbulent backdrop. The corporate travel recovery has stalled, economic concerns persist, aircraft production issues and delays continue, and a shortage of spare parts and engines has some airlines scrambling. “In the U.S., we’re in a business recession, and consumer is just fine — consumer is strong,” United Airlines CEO Scott Kirby said in Istanbul. Corporate travel revenue from large, managed accounts, has plateaued in the U.S. at between 75 and 80% of 2019 levels based on comments from executives at American Airlines, Delta Air Lines, and United. The airlines are already looking beyond the current summer season for the next potential step up in business travel. But that does not mean things are bad. “If we’re in the middle of a recession, this is the best recession the airline industry has ever seen,” United CCO Andrew Nocella said. Asked about post-summer travel demand, when many think a slowdown could occur, and he pivoted from definitive comments to say United “remains optimistic” that it will meet its full-year pre-tax margin target of roughly 9%. Emirates President Tim Clark was much more confident that the rest of 2023 will be good for airlines. “For the next nine months we’re full. [But] what happens in 2024 is anyone’s guess,” he said. For example, a mild recession in global markets could negatively affect the recovery but an end to Russia’s war in Ukraine could be “another kickstart to the global economy.”<br/>
