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.

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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