IATA CEO and director general Tony Tyler said (16-Apr-2012) the bottom line impact of increasing fuel prices is being ameliorated by several positive factors, including Europe averting another financial crisis, the stabilisation of freight markets and the slowing of capacity growth, with subsequent increases in load factors and yields. IATA's consensus forecast for Brent crude expects an average price of USD115 per barrel in 2012, up from USD111 in 2011, adding USD36 billion to global airline operating costs. Mr Tyler warned the entire industry remains extremely vulnerable to any new shocks that could push it back into losses, despite a global airline profit forecast of USD3 billion for the year. [more - original PR]
IATA: Freight markets stabilising and capacity control helping load factors and yields
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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.
Global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn