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Airline profitability falls by 60% in 2Q2011, as weak consumer confidence hits the sector

Analysis

Deteriorating consumer confidence and weaker global economic growth prospects are placing further pressure on the world's airlines and their investors. Airline share prices have taken a battering, falling by around a quarter this year on economic jitters and earnings expectations. Airline industry profits in 2Q2011 were down by around 60% on 2010 levels, according to industry grouping, IATA. High jet fuel prices continue to pressure the sector, while a moderation in travel volumes and falling freight demand are also of concern.

IATA, in its Jul/Aug-2011 Airlines Finance Monitor, stated airline share prices, measured using the Bloomberg global index, declined by 9% in Aug-2011 and a further 5% in early Sep-2011. The financial markets still expect airline financial performance to be hit more than most sectors.

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