Investing in airlines today
could it be a convenient strategy or is it too early? Many investors are asking themselves this question as they are approaching the sector with renewed confidence these days, particularly decimated by the pandemic crisis which has, in effect, completely or partially eliminated travel.
Indeed, according to what the IATA (International Air Transport Association), the global airline industry is expected to lose nearly $12 billion in 2022, reducing its losses by 78% compared to this year, as carriers slowly recover from the impact of the Covid-19 pandemic.
But then can we be confident about this industry? We can invest in individual airlines by taking advantage of the best Trading Platforms available today?
Losses will narrow, but profits are not at the door
Let's start by remembering that IATA, which represents nearly 300 airlines that account for more than 80% of global air traffic, has stated that the industry's losses in 2021 will be worse than originally expected, totaling $51,8 billion, thus widening the negative result from a forecast – made in April – of $47,7 billion.
Net losses in 2020 will be $137,7 billion, more than the $126,4 billion IATA had estimated earlier this year and bringing the industry's total net losses from the pandemic to more than $200 billion.
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"We have passed the deepest point of the crisis", said IATA Director General Willie Walsh during the group's annual meeting, held in Boston, United States. This was the first annual meeting that could be held in person since June 2019.Although serious problems remain, the path to recovery is finally getting underway" – he added.
Profitability expected only in 2023
Still talking about the future of the air transport industry, IATA has predicted that the sector will return to profitability in 2023 and said the total number of passengers will rise to 3,4 billion people next year from 2,3 billion this year.
Walsh added that the lifting of pandemic-related international travel restrictions would boost bookings, but lamented the lack of uniform guidelines across countries on safety protocols, such as age-based COVID-test exemptions or methods for validating vaccinations.
In the US, for example, the administration Biden announced last month that he would lift bans on international visitors in November. which were put in place at the beginning of the pandemic, but – to date – it is still unclear how they will be implemented, nor when they will actually come into effect.
In light of this, investments in airlines could become profitable already in the coming months, anticipating – in fact – the recovery of the income statement data. A good opportunity to further diversify your financial portfolio.
