IATA: airline profit margins were broadly the same in Q4

posted on 15th February 2018 by Jordan Newton
IATA: airline profit margins were broadly the same in Q4

Initial airline financial results from the fourth quarter (Q4) of 2017 indicate that profit margins remain broadly the same as in Q4 last year, according to the International Air Transport Association’s (IATA) January report of the Airlines Financial Monitor.

The report stated that the industry-wide EBIT profit margin was a “robust” 10.7 per cent of revenues globally in Q4.

Out of two carriers sampled in Europe the EBIT profit margin was 7.7 per cent, out of four in Asia Pacific it was 11.6 per cent and out of 11 in North America it was 10.6 per cent.

Airlines sampled in Europe had a net post-tax profit of $143 million, in Asia Pacific $754 million and in North America $5.1 billion.

The report also said global airline share prices rose by 2.9 per cent per cent in January, with increases in Europe and Asia offsetting a modest decline in North America while the airline index has fallen broadly in line with the global equity market during the early-February sell-off.

The monitor also said industry-wide passenger yields in late-2017 were largely unchanged in year-on-year terms. IATA forecasts passenger yields to rise “modestly” in 2018 alongside a strengthening in global economic activity and rises in key input costs.

Meanwhile, oil prices rose to a three-year high during January, but fell back sharply in early-February driven by record-high levels of oil production in the US. At the time of writing, the Brent crude oil price per barrel is currently around $63.

The monitor said passenger and freight volumes grew by 7.6 per cent and nine per cent, respectively, in 2017 as a whole and are both carrying solid momentum into 2018.

The passenger load factor posted a record high for a calendar year in 2017 (81.4 per cent), while the freight load factor climbed by 2.5 percentage points compared to 2016.

The monitor also stated stronger global trade conditions have helped to support premium-class demand. Premium’s share of total international passenger revenues increased to 27 per cent in the first 11 months of 2017, up from 25.9 per cent a year ago.