IATA: Airlines to report higher Q2 profits

A Virgin Blue passenger airplane flies by a fuel storage tank to land at Sydney Airport in this file photo. Airlines are forecast to spend US$212bil (RM681.9bil) on jet fuel this year - 30% of their total operating cost - Reuters Photo.

KUALA LUMPUR: More than three-quarters of airline chief financial officers and heads of cargo indicated that profitability increased in the second quarter of 2017 versus a year earlier, according to a quarterly airline business confidence index survey conducted by the International Air Transport Association (IATA).

Seventy-seven per cent of respondents reported that profitability increased year-on-year in the second quarter this year, more than double the corresponding share in the previous survey and the highest proportion in almost seven years.

The passenger side remained consistent with the robust demand backdrop seen during the opening months of this year, with 71% of the respondents reporting a year-on-year increase in passenger traffic in the second quarter, which resulted in the backward-looking weighted-average score recovering to a five-quarter high.

“Eighty-one per cent of respondents expect passenger volume to rise further in the year ahead ?the highest proportion since the October 2013 survey,” it said in a statement.

On the input cost, the survey revealed that half of the respondents reported a decrease in the quarter under review compared with a year ago while a further 31% of the respondents reported no change.

“A number of respondents noted the role that efficiency gains and optimisation efforts have played in decreasing costs. A modest 19% of respondents reported an annual increase in input costs in the quarter.

“Given renewed weakness in crude oil and jet fuel prices, just 19% of respondents reported that they expect input costs to increase over the coming 12 months. This was the lowest proportion in six surveys,” it said.

As to employment, the survey showed that 43% of respondents reported an increase in the second quarter 2017 relative to the same period in 2016, with just 15% reporting a decrease, making the weighted-average score for employment activity over the past three months remaining above the 50-mark for the 10th straight quarter.

The survey also showed that industry heads were markedly more confident about the outlook for profitability in the year ahead than they have been in recent surveys, mainly reflecting expectations that the demand backdrop would remain robust. - Bernama