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March - April 2017 IATA Airlines Financial Monitor  

Airlines Financial Monitor

Key Points

  • Global airline share prices rose by 2.5% in April, partly reflecting expectations that the squeeze on margins will diminish. The monthly increase was driven by European airlines, with modest increases in Asia-Pacific and North America.
  • The initial financial results from Q1 2017 highlight the extent that airline profit margins were squeezed in the opening months of the year by a combination of higher costs and weak yields.
  • Brent crude oil prices fell sharply in mid-April, and dropped below US$50/bbl in early-May for the first time since the end of November. Forward markets still expect oil prices to rise only gradually over the next 2-3 years.
  • Passenger yields remain well below their level a year ago, but there are ongoing signs that the long-standing downward trend in the seasonally adjusted series may be bottoming out.
  • Passenger and freight demand growth has made a strong start to 2017. The passenger load factor remains steady close to a record high level, while the freight load factor has recovered back to levels last seen in early-2015.
  • Premium airfares continue to hold up better than those of the economy cabin, supporting airline finances. 
Financial indicators
Global airline share price index rose in April to their highest level in 18 months

  • Global airline share prices rose by 2.5% in April, taking them to their highest level since October 2015. The global airline index has now risen by 10% over the last year, just below the 13% increase seen in global equities over the same period.
  • The increase in airline share prices was driven by European airline share prices, which jumped by 10.4% following signs of an improved trading environment in the region. European airline shares are now unchanged from levels seen a year ago.
  • The Asia-Pac airline index rose by a modest 0.4% in April, but have gained 12.7% since the star of the year, helped by the recent strength of air freight. By contrast, North American airlines shares have fallen by 1.7% since the start of 2017, but remain more than 23% higher than where they stood last year.
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