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17-Mar-2016 9:29 AM

IATA: Airline profit improved at the end of 2015, airfares to decline and oil price recovering

IATA released (16-Mar-2016) its Airlines Financial Monitor for Jan/Feb-2016. Key points include:

  • Global airline share prices increased 4.7% in Feb-2016, recovering some of the decline seen in Jan-2016. US share prices rose 9.5%, while European recovery was more subdued (+1.9%). Asia Pacific airlines saw further declines (-0.4%);
  • 4Q2015 airline financial results point to a strong end to 2015, with a sample of 50 airlines showing a 60% year-on-year improvement in net profit;
    • Profit was led by carriers in North America, with an aggregate margin of 15%;
    • Latin American airlines were the only regional group to see profit declines, due to challenging economic conditions;
  • Crude oil prices have rallied in recent weeks, driven by market expectations of a tightening in supply. Oil prices remain around 30% lower year-on-year;
  • Global air fares fell by around 4-4.5% in 2015, after accounting for distortions related to the rise in the US dollar over the past 18 months. Further falls in air fares are likely to be seen in 2016 as fuel hedging contracts unwind and the decline in oil prices seen towards the end of 2015 feed through;
  • Global air passenger market made a strong start to 2016, with most regions posting record-high passenger load factors for January. The continuation of the strong upward trend in seasonally-adjusted traffic underlines the resilience of industry performance to the equity market turmoil seen early in 2016;
  • Cargo made a reasonably solid start to 2016 by its standards, although challenges remain. Freight volumes are set for another year of just modest growth in 2016. FTKs finally surpassed their seasonally adjusted peak reached in Feb-2015. The freight load factor remains rooted near a six-year low, keeping intense pressure on cargo yields. [more - original PR]

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