http://www.iata.org/whatwedo/Documents/economics/airlines-financial-monitor-jan-17.pdf
Julian Bray Broadcaster and Aviation Security Expert comments: The IATA Q4 Airlines Financial Monitor has just been released and the devil is in the detail and could call into question the need for an additional runway at London Heathrow or elsewhere. Travel patterns have changed, but still premium travel is underpinning economy classes. The shift from Hub Airports to point to point is underlined by IAG returning its British Airways (using smaller aircraft) brand to Birmingham, albeit only at the weekends but IAG already have their other brands providing a weekday service out of that regional airport, Although IATA claims 'solid performance' for the air transport industry, it then points up the soft underbelly of the industry, the price of oil. A few airlines have sufficiently hedged against future price fluctuation ( Ryanair being streets ahead in fuel hedging technique and the purchase of new aircraft reputedly their forward financing costs are around 2%!!) whereas the majority are at the mercy of the markets. For example IATA says "Brent crude oil prices have been broadly stable around $US55/bbl since the start of December and spent January trading in a tight range. Prices are expected to rise only gradually."
IATA Q4 2016 AIRLINES FINANCIAL MONITOR
KEY POINTS:
The initial financial results for Q4 2016 indicate a continued solid performance for the air transport industry, albeit with ongoing signs that momentum in the profitability cycle has weakened.
Global airline share prices began the year on a positive note, rising 1.5% in January and a healthy 6.8% over the past year. However, the industry has lagged the overall performance of global equities on both measures.
Brent crude oil prices have been broadly stable around $US55/bbl since the start of December and spent January trading in a tight range. Prices are expected to rise only gradually.
Downward pressure on industry-wide pax yields remains, despite increases in key cost components, particularly fuel and, in some markets, labour. The aggregate, however, masks differences in individual markets.
Both pax [passenger] and freight demand ended 2016 on a strong note, delivering above-average growth for the year. Likewise, load factors also performed strongly in 2016, with the passenger measure registering a record annual outcome.
Premium airfares continue to generally hold up better than those of the economy cabin, helping to support airline financial performance.
JULIAN BRAY +44(0)1733 345581, Journalist & Broadcaster, Aviation Security & Airline Operations Analyst/expert, Travel / Maritime & Cruise Industry, NUJ, EQUITY, LIVE ISDN LINK, Broadcast ISDN COOBE ++44 (0)1733 345020 e&oe Old faithful NOKIA: 07944 217476 www.aviationcomment.com
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