Asia carriers close to break-even in 2014

Asia Pacific airlines operated at close to break-even in 2014, compared to a net profit of $2.2bn in 2013.
Preliminary financial performance figures released by the Association of Asia Pacific Airlines (AAPA) show that stiff competition, excess capacity, high fuel costs and Asian currency volatility were the major drag on results.
This was despite further steady growth in both passenger numbers and air cargo traffic volumes during 2014.
Said the AAPA: “Although air cargo markets were also not spared from persistent yield pressure, the upswing in demand helped lift cargo revenue to a combined total of $20.8bn for the year, a 2.7% increase compared to 2013."
In 2014, international air cargo traffic, measured in freight tonne kilometres, also registered a welcome 5.3% increase following several years of weak cargo market demand, said the association.
Commenting on the financial results, AAPA director general Andrew Herdman said: "Asia Pacific carriers faced a number of significant challenges in 2014, with capacity growth slightly outpacing market demand leading to intensely competitive market conditions across all segments of the industry.
“In addition, the strengthening of the US dollar against many Asian currencies had some effects on travel patterns as well as increasing the burden of dollar obligations. In spite of this, overall, the region’s carriers managed a thin operating margin of 1.6%, down from 2.3% in 2013."
Looking ahead, Herdman added: "The operating environment remains highly competitive, even though airlines have been carefully reviewing their route networks and closely matching capacity with the expected growth in demand.
“The benefits of lower oil prices should be reflected in further growth in travel demand, although the financial impact on individual airlines will vary depending on their respective fuel hedging policies.”

Source: AAPA

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