(Yicai) June 5 -- The International Air Transport Association has raised its earnings forecast for the global airline industry, but Chinese carriers are still under pressure and may not turn a profit this year. 

Their profitability will depend on a pickup in outbound travel, according to Xie Xingquan, the IATA’s vice president for North Asia. The impact of geopolitical conflicts and the staff shortage at some airports abroad are the main barriers to a further resumption of international flights, he told Yicai.

Outbound flights from China have returned to just 72 percent of the level before the Covid-19 pandemic in 2019, which has resulted in many wide-body aircraft being used on domestic routes, squeezing airfares and revenues, according to the IATA.

Recovery rates on routes between China and popular European destinations and the United States are low, while flights to the Middle East, Africa, and Australia have exceeded the pre-pandemic level, according to some airlines that attended the IATA’s annual general meeting which ended yesterday.

Chinese airlines have faced severe financial challenges in recent years, with heavy losses at the major players China Southern Airlines, China Southern Airlines, and Air China, due to the pandemic’s impact on travel demand. The pace at which international flights from China resume is crucial to any return to profitability.

Chinese carriers are still struggling with the problem of oversupply, said Lin Zhijie, a civil aviation industry analyst. Moreover, this year’s peak season was mediocre, especially because of the high base last year, as many Chinese returned to travel after the pandemic, Lin added.

Global airlines are expected to grow their profits for the second year in a row this year, with those in the Asia-Pacific region clocking up the highest increases, the IATA said at its AGM.

The global industry is expected to post a combined USD30.5 billion of net profit and a 3.1 percent profit margin this year, up from the IATA’s previous forecast for USD25.7 billion and 2.7 percent. Revenue will likely jump 9.7 percent to USD996 billion and expenditure 9.4 percent to USD936 billion, both record highs.

Carriers in the Asia-Pacific may have net profit of USD2.2 billion, up 2.7 times from last year. North American airlines will be the most profitable at USD14.8 billion, nearly seven times that of Asia-Pacific carriers.

The Asia-Pacific is expected to account for half of global passenger traffic growth this year, thanks to the recovery of domestic markets in China, Japan, and Australia, Xie said.

Editor: Futura Costaglione