Airlines expected to lose US$ 1.4 billion in Latin America in 2023 – 05/06/2023 – Market

The airline industry in Latin America is expected to recover this year the volume of passengers transported in 2019, the last year before the pandemic. However, in the sum of the results, it should still end the period with losses.

The sector in the region is expected to end 2023 with an operating loss of US$ 1.4 billion (R$ 6.9 billion, at current prices), according to projections by IATA (International Air Transport Association).

In 2022, IATA estimates that airlines operating in Latin America will record a combined loss of US$ 3.9 billion (R$ 19.2 billion). The account considers the results of all companies, with some having made a profit in the period.

When looking at the sum of global data, the airline industry should finally come out of the red in 2023. The forecast is to earn US$ 803 billion (R$ 3.9 billion) in 2023 and spend US$ 781 billion (R$ 3.8 b) in expenses. This would generate an operating profit of US$ 22 billion (R$ 108.7 billion) in the year. Net profit should be US$ 9.8 billion (R$ 48.2 billion), a margin of 1.2%.

This year, Latin America and North America should recover the volume of passengers they had in 2019, before the pandemic. All other continents, such as Europe and Asia, should return to the level before the health crisis only in 2024.

In 2023, airlines should earn an average of US$ 2.25 (R$ 11.12) per transported passenger, estimates IATA. “It’s enough money to buy half a cup of coffee in Geneva, where I live. Maybe we should start asking for tips”, joked Marie Owens Thomsen, chief economist at the entity, when announcing the data during an event in Istanbul.

About Latin America, Thomsen said that despite the increase in passengers, the costs of companies have also risen, which compromises profitability. Thus, according to her, even if ticket prices have increased, the extra money does not stay with the airlines.

“We haven’t been making money as an industry in Latin America since 2017. Even before the pandemic, companies were struggling,” says Peter Cerdá, IATA’s vice president for Latin America.

“The problem is the operating environment. In Brazil, for example, there are many taxes. Airlines pay maintenance costs and the acquisition of aircraft in dollars, and the real is weaker than the dollar, inflation is high”, Cerda said.

The vice president also said that the high number of customer lawsuits against airlines, such as seeking compensation for canceled flights, also brings extra costs. “Brazil continues to be the country with more lawsuits against the sector than any other in the world”, he points out.

The recovery of the Latin American market takes place at a different pace according to the countries. In February this year, domestic flights in Brazil took 2.4% fewer passengers, compared to February 2019, before the health crisis.

In Colombia, the total number of passengers in February 2023 was 27.8% higher than in the same month of 2019. Mexico, with 20.9% more, and Argentina, with 3.9% more, are also in better situation.

The reporter traveled at the invitation of IATA.