Global airlines see shares drop, but outlook remains positive
Share prices for the world’s publicly listed airlines have fallen 11 percent since the start of the year, according to recent data from the International Air Transport Association (IATA), but the trade group says financial results indicate the first quarter of the year should be positive for profits.
The IATA data also showed that airfares have fallen by about 5 percent on an annual basis so far this year, and said with oil prices on the rise since January, the “stimulus to demand from lower airfares is likely to fade” in the second half of the year.
“Premium airfares continue to offer an important buffer for overall airline financial performance and have held up better than their economy counterparts on many of the key premium routes for far this year”, the IATA reported.
The group also said freight volumes were up 3.2 percent in April, but said rising capacity and low freight loads were keeping “intense pressure” on cargo yields and revenues.
The IATA said Asia-Pacific airlines saw the biggest decline in share values, dropping 5.2 percent while North American carriers fell 2.8 percent and European carriers fell 0.7 percent. Despite those declines, the IATA said industry profitability in Q1 2016 was around 25 percent above the levels seen in the first quarter of last year.
Premium international traffic is slowing, the IATA said, compared to economy travel, accounting for 5.6 percent of the total in the first quarter compared to 6 percent during the same period a year ago. Premium fares however, have held up, the IATA date showed, with premium’s share of revenues increasing in the North America market.