The result of the October survey of airline Chief Operating Officers (CFOs) and cargo heads shows that airline profitability expectations have fallen further compared to earlier in the year (Q1), further but remains positive.
This is according to International Air Transport Association (IATA) quarterly survey of airline CFOs and heads of cargo in October.
Recent past profitability continues to show gains on a year ago and the outlook remains positive, but the October survey suggests that some of the drivers of strong profit expectations may have peaked earlier in 2015 and are currently stable or weakening.
The rate of expected improvement in profitability over the next 12 months has fallen in October compared to Q1, suggesting that improvements in key drivers might have peaked earlier in the year.
Recent gains in profitability have been driven by strong growth in passenger volumes and falling input costs.
The survey shows that passenger volumes were reported to have expanded at a robust rate during the third qaurter, but growth in cargo volumes is now broadly flat on the year ago period, which is consistent with FTK data and the lackluster demand backdrop.
The growth outlook is positive for both passenger and cargo businesses, but not at the strong pace that was expected earlier in the year. This likely reflects concerns over weakness in the global business environment and emerging market economies.
Respondents reported seeing a decline in input costs in Q3 compared to a year ago, and that trend is expected to continue in the year ahead;
Consistent with the lower input costs, the survey also showed weakness in yields in both businesses, for the recent past and the coming year.
Airline employment activity was reported to have been stable in Q3, but a small increase is expected in the year ahead, consistent with the positive outlook for financial performance.
Passenger traffic volumes were up during Q3 2015 compared to the year ago period.
The survey results are consistent with the latest air transport data, which indicate that air travel is up 6-7 percent compared to a year ago. And this is stronger than the Q2 results.
“Despite weakness in some emerging market economies, passenger air travel continues to expand strongly”.
Sade Williams
