IATA said airline profitability remained weak in the first quarter as traffic and yields declined, offsetting the benefits of lower fuel prices and capacity cuts, but “pessimism about the outlook ahead. . .has softened somewhat,” according to its latest Airline Business Confidence Index released yesterday.
IATA’s survey of airline members revealed that carriers “have on balance moved away from indicating significantly further reductions in profitability,” the organization said. “The sharp falls in both passenger and cargo traffic over the last three months have hit current results hard but expectations for the year ahead are for more stability. . . Success in resizing capacity combined with sustained lower fuel price outlook and stabilizing traffic towards the end of 2009 drive the more optimistic responses.”
But it warned that “there still remains a high degree of uncertainty in this outlook. . .Others see economic recovery taking longer and that falls in yields will more than offset savings from lower fuel costs. Airlines in Asia continue to express the most bearish outlook with 80% of respondents seeing decrease in profitability over the next 12 months.” In contrast, “the balance” of European and Middle East Airlines expect “improvement in profitability” over the next 12 months.
(ATW)