But a $4.7 billion gain on industry revenues of $779 billion also illustrates that there is much more ground to cover to put the global industry on a sound financial footing. Many airlines are profitable enough to attract the capital needed to drive the industry forward as it decarbonises. But many others are struggling for a variety of reasons. These include onerous regulations, high costs, inconsistent government policies.

The better outlook for 2022 stems largely from strengthening yields and strong cost control in the face of rising fuel prices. 

Passenger yields are expected to grow by 8.4% (vs. 5.6% anticipated in June). Driven by that strength, passenger revenues are expected to grow to $438 billion (vs. $239 billion in 2021). 

Air cargo revenues played a key role in reducing losses and revenues are expected to reach $201.4 billion. That's an improvement compared to the June forecast, virtually unchanged from 2021, and more than double the $100.8 billion earned in 2019. 

Overall revenue is expected to grow 43.6% compared to 2021, reaching an estimated $727 billion. 

Most other factors evolved negatively following the downgrading of GDP growth expectations (from 3.4% in June to 2.9%) and delays in the removal of COVID-19 restrictions in several markets, particularly China. IATA's June forecast anticipated that passenger traffic would reach 82.4% of pre-crisis levels by 2022, but it now appears that the industry's demand recovery will reach 70.6% of pre-crisis levels. On the other hand, loadings were anticipated to exceed 2019 levels by 11.7%, but are now more likely to moderate to 98.4% of 2019 levels. 

On the cost side, jet paraffin prices are expected to average $138.8/barrel for the year, considerably higher than the $125.5/barrel expected in June. That reflects higher oil prices exaggerated by a jet crack spread that is well above historical averages. Even with lower demand leading to reduced consumption, this pushed the industry's fuel bill to $222 billion (well above the $192 billion anticipated in June). 

That airlines were able to cut their losses in 2022 in the face of rising costs, labour shortages, strikes, operational disruptions at many key hubs and growing economic uncertainty speaks volumes about people's desire and need for connectivity. As some key markets, such as China, remained constrained for longer than expected, passenger numbers were slightly below expectations. We will end the year with approximately 70% of 2019 passenger volumes. But with improved performance in both the cargo and passenger businesses, airlines will reach the pinnacle of profitability," Walsh said. 

By 2023, the airline industry is expected to reach profitability. Airlines are expected to earn a global net profit of USD 4.7 billion on revenues of USD 779 billion (0.6% net margin). This expected improvement comes despite increasing economic uncertainties, as global GDP growth slows to 1.3% (from 2.9% in 2022). 

Despite economic uncertainties, there are many reasons to be optimistic about 2023. Lower oil price inflation and continued pent-up demand should help keep costs under control as the strong growth trend continues. At the same time, with such small margins, even an insignificant change in any of these variables has the potential to shift the balance into negative territory. Vigilance and flexibility will be key," Walsh said.