IATA: North American profits make up for global weakness

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American Airlines Boeing 787

Airline profits have increased by 12 per cent in the first quarter of 2016 to $3 billion, with North America making up for the rest of the world being weak, despite freight struggling, the International Air Transport Association (IATA) says in its Airlines Financial Monitor.

North American airlines had a net post tax profit of $3.1 billion, with Asia-Pacific next highest at $127 million. Latin American carriers made a profit of $42 million but Europe made a loss of $208 million, dragging down the results despite being lower than in 2015.

IATA says airfreight has been weak, down 2.1 per cent in the first quarter. The association says it is hard to make direct comparisons due to the US West Coast seaport disruption giving airfreight a boost, but it says demand remains weak. Overcapacity remains a problem, with available freight tonne kilometres increasing by 6.7 per cent in the quarter due to bellyhold capacity on passenger aircraft.

IATA says: “After a one-off boost to air freight owing to disruption at US west coast seaports in Q1 2015, air freight volumes fell by 2.1% year-on-year in Q1. The freight load factor in Q1 2016 dropped by 3.8 percentage points compared to the same period in 2015, and this is keeping intense pressure on cargo yields.”

The association adds crude oil prices are the highest they have been for six months, but are predicted to stay below $50 a barrel until early 2018.