IATA: airline profits fall further

The March/April Airlines Financial Monitor from IATA notes “a further fall in aggregate profits for the airline industry” for the first quarter of 2019, in comparison with the same three months of last year.

Overall, IATA said the EBIT margin in its sample of 20 airlines had fallen to 3.6% from 4.1% a year ago.

The Americas held fairly steady as a whole, while Asia Pacific saw some improvement – and Europe weakened significantly.

A key factor in airline profitability is, of course, the price of oil, which has been on the rise again of late as waived US sanctions on Iranian oil imports have returned to force.

There was a general divergence between passenger and freight performance during the first quarter. Whereas airfreight demand fell, passenger demand rose; while cargo capacity was rationalised, passenger capacity outpaced demand; and in contrast to the stable load factors seen on the passenger side of the business, airfreight load factors declined.

In terms of airfreight demand, IATA said: “Growth in industry-wide freight tonne kilometres (FTKs) bounced back to a positive territory in March; freight volumes were 0.1% higher than their level a year ago, compared with the annual fall of 4.9% recorded in February.”

However, the association cautioned that “it would be too soon to conclude that this month’s uptick represents a change in the recent downward trend”.

Capacity, meanwhile, increased by 3.1% year on year in March. IATA observed: “Over the course of the past year or so, the rate of capacity growth has clearly moderated; indeed, annualised pace of growth over the past six months is down at ~2%, compared to 3.9% earlier in the year.”

Finally, IATA’s report stated that the freight load factor for the industry is currently 1.5 percentage points lower than it was in March 2018, at 49.5%. The downward trend that began in mid-2017 remains in place, it said.