Happy Days Are Back Again For Airline Profit Seekers

GA pilots who may have been losing sleep over the financial fate of the airline industry can rest a little easier. Moody’s Investors Service today (Aug. 8) published a positive outlook for the global airline industry. (Also announced today, Moody’s downgraded credit ratings for several regional U.S. banks citing concerns over deposit risk, a potential recession and struggling commercial real estate portfolios. The cautions sent the stock market into a tizzy.)

The financial analyst noted that recovery in air travel, in its late post-pandemic stages, is supporting a strong rebound in profits “driven primarily by a broader recovery of passenger demand, favorable pricing, operating leverage that accompanies higher passenger volumes, and cost management and efficiency gains.”

Specifically, Moody’s predicts airline profits to reach $29 billion in 2023, nearly double the $15 billion figure achieved last year. Moody’s crystal ball also sees profits exceeding $40 billion in 2024. Those numbers compare favorably to the $30 billion realized in 2019 before the COVID-19 pandemic crippled travel, worldwide.

Moody’s cites fiscal concerns but does not expect possible speed bumps to stem the flow of profits, saying, “Effects of a recession and rising interest rates would likely be modest, as passenger demand continues to exceed capacity in most markets, while demand has yet to return to pre-pandemic levels in the Asia-Pacific region.”