Cathay Pacific upgraded (10-May-2010) its forecast for FY2010, with the carrier now expecting "strong" financial results for 1HFY2010 and, if present trends continue, for 2HFY2010, due to an improvement in cargo and premium passenger revenues from the end of 2009. The carrier warned significant increase in fuel prices or any deterioration of the economy remains a threat to profitability. [more]
Cathay Pacific upgrades FY2010 forecast on the back of improving traffic
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CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.
Northeast Asia's outlook remains bright – and perhaps more so than before
A few years ago amidst the economic downturn it was Northeast Asia – with its main Chinese market – that was a strategic bright spot for aviation.