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Airlines Could Fly High This Year
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Airlines Could Fly High This Year

Airline stocks including Delta Airlines (DAL), American Airlines (AAL), Southwest Airlines (LUV), and JetBlue Airways (JBLU) could be on a resurgence this year after a turbulent period for the last two years due to the COVID pandemic. Even as airlines battle higher fuel prices, the demand outlook is up.

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The International Air Transport Association (IATA) has painted a promising picture of increased profitability and robust recovery and has revised its 2023 outlook for the airline industry. The IATA has predicted a significant upswing in net profits and a resurgence in passenger demand, signaling a positive trajectory for the global aviation sector.

According to this outlook, the IATA expects the airline industry to achieve net profits of $9.8 billion this year, surpassing its previous estimate of $4.7 billion, indicating a net profit margin of 1.2%.

With the lifting of COVID-19 restrictions in various parts of the world and people regaining confidence in air travel, the industry is likely to see a surge in passenger volume. IATA forecasts a total of 4.35 billion passengers in 2023, nearing pre-pandemic levels and underscoring the resilience of the travel sector.

However, economic uncertainties, geopolitical risks, supply chain issues, and potential regulatory cost burdens pose ongoing challenges that could impact profitability.

A resurgent airline sector has meant that the U.S. Global Jets ETF (JETS) has gone up by more than 10% year-to-date.

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