O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT 37 Figure 1: Historical trend of oil prices According to IATA, airlines globally are on a path to profitability recovery, with those in North America already turning a profit in 2022, followed by those in Europe and the Middle East in 2023, and the rest in 2024. For airlines in the EAP region, IATA expected that overall seat capacity would recover to 76 percent of the pre-COVID level, a significant improvement YoY, despite lagging behind other regions such as North America and Europe, which are expected to recover to 99 percent and 89 percent of the pre-COVID levels, respectively. Oil prices are expected to ease to a range of USD 80-90 per barrel in 2023, however, the crack spread might remain high given a limitation in refining capacity, which implies a lesser benefit to the airlines from the decline in oil prices and might continue to pressure airlines’ performance throughout the year. Figure 2: Trend of air passenger traffic recovery Source: IATA/Tourism Economics Air Passenger Forecasts Passenger traffic per region, indexed, 2019 = 100 2019 = 100 Africa Latin America & Caribbean Asia Pacific Middle East Europe North America 140 80 120 60 20 100 40 0 2021 2023 2025 2020 2019 2022 2024 (USD/barrel) 2022 2018 2019 2020 2021 2. COMPETITION Following the industry recovery compared to last year, the competition in 2022 was rationalised with promotional campaigns mainly focusing on high seasonal periods. The limited seat capacity compared to pent-up demand led to an increase in airfare and airlines’ efforts to become profitable. Fuel prices increased significantly due to the Russia-Ukraine war, and certain fees were imposed by the industry to partially offset the impact. On the other hand, the depreciation of the Baht in the first nine months of the year put pressure, at various scales, on the airlines’ financial performance, but the Baht appreciated strongly in the final quarter, which helped alleviate the pressure on airlines’ equity levels. Despite the ongoing recovery, some airlines continued to struggle, remaining in bankruptcy or undergoing rehabilitation to recover from the ongoing impact of COVID-19.
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