23-Jul-2015 4:52 AM

IATA: Airline profit expectations declined in 2Q2015, on global economic weakness concerns

IATA released (22-Jul-2015) its 'Airline Business Confidence Survey' for Jul-2015, covering airline CFOs and heads of cargo. Key points:     

  • 2015 airline profit expectations have dipped from previous highs but remain positive;
  • Rate of expected improvement in profitability over the next 12 months fell in the Jul-2015 survey compared to the Apr-2015 survey, suggesting that improvements in key drivers might have peaked earlier in the year;
  • Recent gains in profitability were driven by strong growth in traffic volumes and falling input costs;
  • Respondents reported seeing a year-on-year decline in input costs in 2Q2015, but at a slower rate than in 1Q2015. Input costs are expected to decline during 2H2015, but not by as much as was anticipated earlier in 2015;
  • Both passenger and cargo volumes were reported to have expanded during 2Q2015, but at a weaker rate than in 1Q2015, suggesting that growth transport volumes may have peaked in previous months;
  • There is also a view that volume growth will continue in the year ahead, but not at the strong pace than was expected earlier in 2015, likely reflecting concerns over weakness in the global business environment and emerging market economies;
  • Survey respondents continue to report declines in yields in both premium and economy, for the recent past and the coming year, reflecting downward pressure from falling fuel prices. But the survey suggests those declines may have bottomed out as they are stable compared to the 1Q2015 survey;
  • Airline employment activity is reported to have increased slightly in 2Q2015, reflecting the continuation of positive financial performance.  [more - original PR]

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