IBA forecasts 60% increase in airline profitability in 2024

Aviation market intelligence and advisory company IBA has predicted that airline industry net profit per passenger will increase by almost 60% between 2023 and 2024. IBA Insight data attributes this to a continued increase in capacity, with available seat kilometres up 18% year-on-year from Q1 2023. 2024 traffic is anticipated to outpace 2019 by 4%, highlighting an overall recovery to pre-pandemic levels, with the upward trend expected to continue. However, older aircraft will likely remain in service for some time, with the two major OEMs only 60% of the way to reaching their mid-decade narrowbody targets and less than 50% of the way to similar widebody projections as of the end of 2023: representing a total of over 4,100 missing new-build aircraft by 2027. Additionally, of the 712 new-technology aircraft in storage, 488 are from the A320neo family with 83% of these powered by GTF engines. IBA estimates that airlines from all regions improved their net profitability in 2023, with a global average net profit margin of 60% (up from 0% the year before). Although the Middle East saw the largest net profitability (with an average 13% margin), net profit improvement is expected to slow in 2024. Airlines in Europe, the Middle East and Latin America are using profitability to lower debts, but while global debts have fallen from a base level of 100% in 2019 to 97% in 2023, North America’s airline debt levels were at 150% in 2023. The aviation transaction landscape is expected to increase year-on-year to close to 4,000 aircraft transactions in 2024, up 500 from the previous year, and reflecting ongoing delays surrounding new-built aircraft. Value and lease rates will also continue to see strong rises, with the 737 MAX 8 and A320neo both expected to reach $410,000 per month by July 2024. In particular, the market value of the A321-200 is also forecast to increase by 25.5% in the 12 months to July 2024, with its lease rate expected to rise 31.1% over the same period.