Whatās Going On Here?A major airline organization predicted on Monday that the industry will return to profit next year. What Does This Mean?Airlines enjoyed their best-ever run of profits before the pandemic hit ā a key reason many of them were able to survive at all, albeit now with a collective debt of around $650 billion. And while theyāre a long way from those heady days, they have been getting back on track: the industryās record $138 billion loss in 2020 fell to $42 billion last year, and itās expected to fall to $10 billion this one. That should, the International Air Transport Association predicts, allow the industry to get back to profitability in 2023. But it wonāt be without obstacles: there are doubts over how long bumper post-Covid sales will last, especially as higher fuel costs force airlines to raise ticket prices on already cash-strapped customers. Some execs arenāt worried, mind you: they point out that passenger numbers held steady in 2009 after the financial crisis, and even started to rise in 2010. Why Should I Care?The bigger picture: Fuel for thought.
Airlines also warned on Monday that the industryās goal of net-zero by 2050 would be hard to achieve unless governments did more to help. Still, higher fuel prices might actually speed up the transition: the price gap between regular jet fuel and sustainable fuel has narrowed significantly since prices of the former boomed, meaning airlines might be more prepared to make the switch.
Zooming out: EasyJet isnāt happy.
Another issue facing airlines is staff shortages, which are now so bad that London Gatwick and Amsterdam Schiphol are capping the number of flights to help them cope. Thatās not good news for airlines like EasyJet, which counts those airports as two of its biggest bases. It was forced to cut capacity on Monday as a result, and analysts suspect the airline could make up to $250 million less in profit this year. | 