4-Nov-2009 11:00 AM

IATA sees threat to recovery in fares and yields; danger of renewed capacity increases

IATA released (03-Nov-2009) its airlines financial monitor for Sep-Oct-2009. Key points include:

  • Financial indicators:
    • Stronger capital markets allowed airlines to raise USD8 billion in new funds in past two months;
    • Airlines equity prices moved in line with market in Oct-2009, Asian carriers outperformed, while US airlines underperformed;
    • Early results for 3Q2009 show an improvement in financial performance, but IATA maintained its 2009 industry loss forecast of USD11 billion.
  • Fuel costs:
    • Oil hit USD85 per barrel in mid-Oct-2009, the year-on-year advantage of lower fuel prices is disappearing;
    • Further rises expected by futures markets;
  • Demand:
    • Travel volume growth positive in Sep-2009 (+0.3%), first positive figure in a year;
    • Seasonally adjusted RPKS are 5% higher than 1Q2009 lows, but still down 6% on early 2008 levels;
    • FTKs up 12% over Dec-2008 low, but remain 17% below early 2008 levels.
  • Capacity:
    • IATA questions whether capacity restraint will continue, as published schedules suggest some increase;
    • Load factors on international services returned to levels and pattern seen in 2007;
    • Aircraft utilisation down 3% for narrowbodies and 4% for widebodies;
    • Marked improvement in Sep-2009 freight load factors, moving back towards pre recession levels;
    • New aircraft deliveries again exceeded 100 in Sep-2009, 911 new aircraft delivered this year, with 213 retired and 156 in storage;
    • Commercial aircraft fleet expanded overall by 2%.
  • Yields:
    • Still very weak, but more favourable than in 2Q2009;
    • Load factors returning to pre-recession levels, leading to a rise in average fares;
    • Pace of yield improvement is slow and levels remain well down on 2008;
    • Low levels of aircraft utilisation and planned deliveries suggest a threat to fares and yields.

Want More News Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More