Airlines have lost a quarter of their share value this year and profits are down 60% on last year, the International Air Transport Association (IATA) said today (September 6).
With jet fuel prices up 50% on 2010, the airline cartel predicts that growth will slow down amid market gloom and deteriorating economic conditions.
One of the few bright spots in the Association’s Financial Monitor for July and August was that while capacity had increased ahead of demand, airlines had “so far managed to sustain passenger load factors.”
Airline share prices, according to the Bloomberg global index, had dropped 9% in August anmd a further 5% in the early days of September.
IATA said that airlines traditionally earn 80% of their profits in the second and third quarters.
But net profits in Q2 this year totalled $1.8bn, nearly 60% down on 2010.
It said that so far this year, the industry had broken even compared with net profits in 2010 of $3bn.
It added: “The deterioration in profits is widespread but European airlines improved against a volcanic ash impacted Q2 last year.”
Jet fuel prices had peaked in April and were now on a downward trend but they were still 50% higher than last year, IATA said.
But price levels were volatile with swings of around 10% amid the slow downward trend.
IATA said that despite the economic gloom, air travel was continuing to expand with a 5.9% year-on-year growth rate.
But it added: “However, like the cartoon character still running over the edge of a cliff, the support for air travel from world trade, business and consumer confidence has slumped.”
While airlines had been announcing cuts, IATA said there was “so far little sign of a slowdown” with capacity expanding to meet the growth.