Improving airline finances get North American boost

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North American carriers drove the improving financial performance of airlines in the first quarter (Q1) of 2015, a report by the International Air Transport Association (IATA) has found.

The association’s Airlines Financial Monitor for April to May, which sampled 56 airlines around the globe, shows the industry improved significantly on Q1 in 2014 at both an operating and net profit level.

IATA says airlines in North America fuelled the better Q1 figures, through consolidation and cost cutting, which has boosted profitability and lower fuel costs. Asia Pacific airlines have also improved compared to Q1 2014, and Chinese carriers recorded solid Q1 profit results, which IATA says was due to strong demand and improved operational efficiency.

In Q1, the 56 carriers sampled by IATA had an operating profit of $8.3 billion and a net post-tax profit of $5.1 billion. These same airlines in Q1 2014 had an operating profit of $708 million and a net post-tax profit of minus $1.3 billion.

IATA says worldwide airline share prices were up 12 per cent in April on a year ago, despite some recent weakness due to the strength of the US dollar. Crude oil prices rose slightly in May, buoyed by slowing inventory growth in the US, but are up 15 per cent on March, though still 40 per cent lower than the highs in 2014. “This increase in oil prices has largely come as a result of changes in supply conditions,” IATA says.

As for airfreight volumes, IATA says freight tonne kilometres (FTK) in April rose 3.3 per cent on April 2014. For the first four months of 2015, FTK was up 4.3 per cent compared to the same period in 2014. This was driven by 12.3 per cent FTK growth in the Middle East and 7.3 per cent FTK growth in Asia Pacific.

“Volumes were broadly flat in April compared to March, and in fact there has been no acceleration in the growth trend since late 2014. This development is consistent with a trend change in world trade, particularly in emerging Asia, where volumes are down 10 per cent compared to Q4 2014,” IATA explains.

The association says airfreight capacity in available freight tonne kilometres (AFTK) was up 5.5 per cent in April on the same month last year. AFTK was up 4.9 per cent in the first four months of 2015, compared to the same period in 2014.