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<p class="has-drop-cap">After years of challenges since the COVID-19 pandemic, the airline sector returned to profitability in 2023, with net profit projected to reach $23.3 billion on a 2.6% margin. According to the International Air Transport Association (IATA), the industry is <a aria-label=" (opens in a new tab)" href="https://www.iata.org/en/pressroom/2023-releases/2023-12-06-01/#:~:text=China's%20international%20travel%20remains%2040,to%20a%20profit%20in%202024." target="_blank" rel="noopener noreferrer nofollow" class="deco-link">predicted to carry this momentum into 2024</a> and make it a record-breaking year in revenue and traveler numbers. However, the high cost of capital in the current macro environment will likely continue to be a challenge.</p>
<h3 id="number-of-travelers-expected-to-hit-record-high-in-2024">Number of Travelers Expected to Hit Record High in 2024</h3>
<p>According to a report by a trade association of the world’s airlines, the industry is slated for a record-breaking 2024 year.</p>
<p>Notably, airline profits are expected to stabilize next year as continued growth in post-pandemic travel activity is offset by elevated costs of capital and capacity constraints, industry group IATA stated on Wednesday.&nbsp;</p>
<p>The group’s findings revealed that the global airline sector has rebounded mainly from the COVID-19 pandemic amid surging demand across North America, Europe, and the Middle East markets.&nbsp;</p>
<p>Consequently, the airline sector returned to profitability in 2023, with net profit estimated to hit $23.3 billion on a 2.6% margin. These metrics are expected to increase to $25.7 billion and 2.7% in 2024, respectively, according to IATA.&nbsp;</p>
<p>Further, revenues are projected to hit a new all-time high of $964 billion, while the number of travelers globally is set to reach 4.7 billion – also a historic level. This compares with 4.5 billion travelers in 2019, before the Covid-19 pandemic.&nbsp;</p>
<p>IATA also said that many countries behind in travel recovery in recent years are expected to reach profitability again in 2024. This includes China, where international travel remains 40% below pre-pandemic levels.&nbsp;</p>
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<h3 id="iata-concerned-about-cost-of-capital-amid-high-interest-rates">IATA Concerned About Cost of Capital Amid High-Interest Rates</h3>
<p>Although revenues are anticipated to hit record highs, IATA raised concerns about the high cost of capital driven by elevated interest rates.&nbsp;</p>
<blockquote class="wp-block-quote">
 <p>“Industry profits must be put into proper perspective. On average airlines will retain just $5.45 for every passenger carried. That’s about enough to buy a basic grande latte at a London Starbucks.”</p> <cite>– IATA’s head Willie Walsh said. </cite>
</blockquote>
<p>The market is now <a aria-label="largely pricing (opens in a new tab)" href="https://www.cnbc.com/2023/11/21/fed-minutes-november-2023.html" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">mainly pricing</a> that the current Fed funds target range of 5.25-5.5% represents a peak, with first interest rate cuts expected in 2024. This sentiment increased optimism among stock and crypto investors, pushing <a href="https://tokenist.com/after-novembers-rally-the-spx-is-only-2-below-its-2023-intraday-high/" rel="noopener noreferrer nofollow" class="deco-link">S&amp;P 500</a> and <a href="https://tokenist.com/btc-is-up-19-over-30-days-how-far-can-it-go-in-2024/" rel="noopener noreferrer nofollow" class="deco-link">Bitcoin to multi-month highs</a>.&nbsp;</p>
<p>Meanwhile, IATA warned that further global instability, including <a href="https://tokenist.com/oil-and-gold-prices-surge-as-conflict-in-the-middle-east-continues/" rel="noopener noreferrer nofollow" class="deco-link">wars in Gaza</a> and Ukraine, could also negatively impact the airline sector, particularly as they continue to drive up oil prices.&nbsp;</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe>
<p><strong><em><b><i>Do</i></b> you think the travel industry and airlines can scale new heights next year? Let us know in the comments below.&nbsp;</em></strong></p>
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/airlines-set-for-a-record-breaking-2024-but-interest-rates-remain-a-concern/">Airlines Set for a Record-Breaking 2024, But Interest Rates Remain a Concern</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Airlines Set for a Record-Breaking 2024, But Interest Rates Remain a Concern

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