Stability reigns, more or less, among operators

Airline bean counters have lost a little confidence since the end of 2014, a new IATA survey claims, although most CFOs still expect improved profits over the next 12 months.

Regarding future profitability, optimism peaked in January at levels last recorded in mid-2010, although it is uncertain whether IATA conducts uniform surveys.

About 40 per cent of respondents this month expect profits to flatten or decline in the coming year, despite a general expectation that costs will keep falling thanks to cheaper oil. This suggests a keener pricing environment, and roughly 45 per cent of passenger and cargo carriers predict that yields are set to fall.

Naturally the results mask contrary expectations in certain regions, though IATA did identify some macro-concerns…

“There is a view that volume growth will continue in the year ahead, but not at the strong pace that was expected earlier in the year, likely reflecting concerns over weakness in the global business environment and emerging market economies,” the airline body stated.

Those issues will also affect cargo carriers, who have sounded a note of caution as world trade growth starts to slow.

Still, the freight industry seems to have fully recovered from its slump in 2012 and the “outlooks for cargo volumes remains positive” according to IATA.

In the US passenger market, despite speculation about possible airline collusion, several majors expect softer yields in 2015, with Delta only expecting them to pick up in the final quarter.

In Europe, though, budget airline easyJet has just raised its full-year profit forecast by 10 per cent despite uncertainty caused by terrorism in Tunisia – a holiday destination – and the Greek crisis.

“Our Q3 performance means that for the full year easyJet will grow revenue, profits and dividends,” said easyJet CEO Carolyn McCall.

Bar any major shocks, then, a rare period of stability for the airline business looks set to continue.

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