IATA: Net and operating profits improving

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Airline financial performance is “improving strongly” at both an operating and net profit level, according to the International Air Transport Association (IATA).

The association published its March-April Airlines Financial Monitor report, in which it sampled the initial first quarter (Q1) financial and operating performances of 25 airlines across the globe.

The carriers sampled posted a combined operating profit of $5.7 billion and net post-tax profit of $3.9 billion in Q1. This compares with operating profit of $256 million and a net post-tax profit of minus $1 billion in Q1 2014.

IATA says: “This was driven by North American airlines, where consolidation and cost cutting has resulted in a significant boost to profitability and lower fuel costs. Asia Pacific airlines have also improved on a year ago. Chinese carriers have recorded solid Q1 2015 profit results, owing to strong demand and improved operational efficiency.”

The 12 North America airlines sampled had a net post-tax profit of $356 million. The six carriers in Asia Pacific had a net post-tax profit of $230 million. But, the two airlines sampled in Latin America had a net post-tax profit of minus $35 million and the five carriers in Europe had a net post-tax profit of minus $1.5 billion.

The report says, worldwide, airline shares fell 1.5 per cent in April, which was in response to the strength of the US dollar, but are still up 23 per cent on a year ago. IATA says crude oil prices also rose 20 per cent in May, compared to the March low of around $50 a barrel, which has impacted financial performance. As reported last week in Air Cargo Week, the monitor report says volumes rose steadily in March after a surge in February due to temporary factors, but still above the figures in January.

IATA explains that in March, freight tonne kilometres (FTKs) rose by 1.6 per cent compared to March 2014. This was a significant drop on the 11.7 per cent rise in February this year.

The association says capacity decreased in March, which was consistent with the moderation in FTK volumes. Available freight tonne kilometres increased 3.2 per cent on March 2014 compared to the 7.4 per cent rise in February.