World airlines boost profits as passenger numbers rise
Published 25/07/2014 | 00:00
Global aviation executives think airlines will make more profits this year than in 2013 and expect passenger numbers and cargo volumes to rise.
Their predictions, in the latest survey by the International Air Transport Association (IATA), come as Eayjet yesterday forecast that its full-year profit will rise by between 14pc and 19pc.
But its shares fell over 5pc because Easyjet's forecast failed to reassure investors.
The airline said it expects to make a full-year profit of between £545m (€687m) and £570m (€719m).
Investors had pencilled in profits at the high end of that range.
Shares in Ryanair were just under 1pc lower. It releases first quarter results on Monday.
Analyst Stephen Furlong at Davy Stockbrokers said he expects strong figures from the airline as well as positive commentary regarding the summer season. He's assuming that net profits at Ryanair for the first quarter will nearly double to €154.1m.
"The market will be looking at the summer performance of new bases at Athens, Brussels, Lisbon and Rome and how allocated seating is embedding in the busy summer schedule," he said.
Aer Lingus releases second quarter results on Wednesday.
A number of US airlines released strong results yesterday.
American Airlines, which merged with US Airways in December, said it will pay its first dividend since 1980 after posting record quarterly profits.
United Airlines said it made a second-quarter profit of $919m (€682m), up 51pc year-on-year.
Both United and American Airlines said they plan to buy back $1bn (€742m) of shares.
Southwest also unveiled a record second-quarter profit.
IATA said that global passenger traffic rose during the three months to the end of June compared to the same period a year earlier. Nearly 70pc of airline chief financial officers expect passenger numbers to rise further over the next 12 months.
IATA said the rate of improvement in July passenger number growth slowed compared to April.
"This is likely reflecting a lull in air travel growth in earlier months due to some slowdown in improvement in demand drivers compared to late-2013," it said. "Latest data, however, saw there is resumption in both air travel growth and positive trends in demand drivers."
A more stable global economic environment is also spurring cargo demand.
"Respondents reported growth in air freight volumes over recent months, which is consistent with freight data and the resumption in growth in business confidence and world trade volumes," according to the survey.
Almost 60pc of airline executives expect cargo demand to rise in the next year.
The survey also found that previous declines in airline input costs have been reversed, largely due to increases in oil prices.