Airlines forecast profits in 2015

GENEVA, 21 January 2015: Airline profit expectations for 2015 are rising, based on  more positive results in the second half of last year, IATA’s quarterly survey of airline CFOs indicates in its latest edition released, earlier this week.

Financial performance started to improve in the second half of 2014. The outlook remains positive, which suggests there will be further growth in airline profitability.

The survey indicates that falling input costs, mainly fuel, and growth in volumes, are responsible for stronger financial performance, late last year, as well as the positive outlook.

Respondents reported seeing a decline in input costs in Q4, largely due to a fall in crude oil prices over recent months. They expect the trend to continue during the year ahead.

Inside no.5The January survey results show that input costs continue a downward trend started mid-year. The decline in input costs in Q4 is a result of the fall in crude oil prices over recent months.

Crude oil prices, and therefore jet fuel prices, have declined due to several factors, including increasing oil supply in the US as well as a strengthening US dollar.

Survey respondents expect the trend to continue during the year ahead, with an outlook for further declines.

Both passenger and cargo volumes were reported to have expanded during Q4 of 2014, which is consistent with latest air traffic statistics;

There is also confidence that air transport volumes will continue to expand, this year, despite rising concerns about the health of the global economy.

Passenger traffic increased during Q4 2014 compared to the same period in 2013. The  growth rate in the January survey remained stable compared to the October period. The lack of further improvement in the traffic growth rate is likely reflecting concerns about global economic performance. Latest data show that air transport continues to expand at a rate of 5-6%.

Looking ahead, the demand backdrop suggests that growth in passenger volumes in the coming months will continue, but at a slightly slower pace than was indicated in the previous (October) survey. This is consistent with uncertainty about global growth, as indicated by recent weakness in business confidence.

(Source: IATA)