IATA: Airline Profits Not Expected To Improve

KUALA LUMPUR, July 15 (Bernama) -- Airline profits are not expected to improve over the next 12 months, said the International Air Transport Association (IATA). In a statement Wednesday, IATA said, based on its Airline Business Confidence Index quarterly survey of airline chief financial officers and heads of cargo in July 2016, the industry's profitability fell slightly year-on-year (yoy) during second quarter 2016 (Q216). "This partly reflects disruption following recent terrorist attacks, particularly for European airlines. "Judging from the pattern of similar events in the past, such negative impacts should prove to be temporary," it said. It said the results also suggested that profit margins were starting to come under pressure, as falling input costs may now be outweighed by pressure on industry yields. "Just under half of respondents reported seeing an annual decrease in operating costs in Q216, which is consistent with wider developments in the crude oil market," it said. It said despite the rally in oil prices since the start of the year, the majority (80 per cent) of survey respondents expected operating costs to fall further or to remain unchanged over the next 12 months. On passenger yields, it said, 65 per cent of survey respondents reported a yoy decrease in passenger yields in Q216. "Ongoing strong capacity growth continues to put acute pressure on cargo yields," it said. --BERNAMA