Airlines say industry turning the corner, forecast increased profits ahead

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HeathrowAirportBusiness confidence of stakeholders in the profitability of the airline industry over the next 12 months is positive, according to the newest findings of the International Air Transport Association (IATA).

The association’s third-quarter survey of airline CFOs and heads of cargo conducted in October indicated that they have high expectations for the year ahead as they note an improvement in recent performance.

The survey said respondents found that recent past financial performance has started to improve again compared to a year ago, after no gains in the second quarter. The report also highlights their optimism about seeing further growth in profitability.

Falling inputs costs and stronger growth in traffic volumes were cited as factors behind the better recent financial performance as well as the positive outlook.

Respondents reported seeing a decline in input costs in the third quarter, largely due to a fall in crude oil prices over recent months, and expect the trend to continue during the year ahead, which is consistent with the positive outlook for profitability.

Both passenger and cargo volumes were reported to have expanded during the third quarter, reflecting improvement in the demand environment after weakness in early 2014.

There is also confidence that air transport volumes will continue to expand over the next 12 months, supporting the expectation for profit improvements during the next 12 months.

Although respondents continue to report declines in yields, downward pressure eased in the third quarter for both businesses, and no further weakness in yields is expected for the year ahead, said the report.

Photo: jnpet