Thursday 22 February 2018

Boost for airlines as global passenger numbers soar

Dublin Airport handled a record 3.1 million passengers in July
Dublin Airport handled a record 3.1 million passengers in July
John Mulligan

John Mulligan

Global airline passenger volumes jumped 7.9pc in the first half of 2017, the fastest pace of growth since 2005 for the first six months of a year, according to the International Air Transport Association (IATA).

It added that the strong first half was driven by a brighter global economic backdrop and stimulus from lower airfares. IATA said that airlines added 6.1pc more capacity to their networks in the first six months of 2017, compared to the first half of 2016.

The transport group also noted that having shown signs of bottoming out in late 2016, the latest monthly data shows that passenger yields have started to "modestly" trend upwards.

When measured on a constant currency basis, passenger yields in May were broadly unchanged from a year ago, when the strongest year-on-year growth rate in more than four years was recorded, according to IATA.

"The turnaround in the long-standing downward yield trend reflects a combination of factors, including a pick-up in global economic activity, as well as upward pressure on some key input costs, including labour, in a number of countries," added the Montreal-headquartered organisation.

"All told, signs that passenger yields are improving are helping to underpin investors' confidence about airline financial performance over the year ahead," it added.

IATA pointed out that global airline shares fell 3.2pc in July - the first decline since March.

"Having risen by nearly 15pc over the previous three months, and having outperformed the global equity index over the past year, the monthly decline in airline shares is likely to reflect a degree of profit taking by investors," it added.

"The European and Asia Pacific share price indices both registered modest declines in July, but the biggest fall was seen in the North America index."

Shares in the North America index fell 7.6pc last month, it said.

But IATA said that airlines continue to post solid financial results.

"The initial airline financial results from the second quarter of 2017 have been robust, and provide the clearest sign that the squeeze on airline profit margins - from weak yields and higher costs - peaked in the first quarter," it said in its update.

Among the airlines releasing results in the second quarter of the year, were Ryanair. It said in July that its first-quarter profits after tax rose 55pc to €397m, while revenue rose 13pc to €1.3bn.

The performance was flattered by the timing of Easter.

Irish Independent

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