Squeeze On Airline Profits Might Have Peaked

Photo: Eva Darron

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Initial airline financial results from the second quarter of 2017 have been more robust than earlier in the year, and suggest that the squeeze on profit margins from higher costs and weak yields peaked in the first quarter of the year, according to the International Air Transport Association’s (IATA) July report.

“Meanwhile, having trended downwards since 2013, the latest monthly data suggest that passenger yields have now started to trend upwards. Exchange rate-adjusted yields were broadly unchanged from their year-ago level in May. Global airline share prices fell in July, driven by a decline in the North America index. Having seen airline shares outperform global equities over the past year, July’s decline appears, in part, to reflect profit taking by investors,” the report read.

Brent crude oil prices suggest a modest rise in the mid-term, and passenger and freight demand growth posted their strongest first half of the year since 2005 and 2010 respectively.

The pick-up in global trade is helping to support premium passenger demand, particularly to, from and within Asia Pacific, according to the report, and premium revenues have risen in year-on-year terms on key routes to and from the region so far in 2017.

Source: aviationbusinessme.com