Global airline share prices bounced back in November, broadly reversing October’s decline while latest airline financial results from Q3 2018 indicate an ongoing squeeze on profit margins.
According to IATA Airlines Financial Monitor – November 2018, the upward trend in passenger demand has moderated over the past six months or so, although the industry-wide passenger load factor remains elevated by historical standards.
Key points:
- The ongoing releases of airline financial data for Q3 2018 continue to point to a squeeze on profit margins from higher input costs relative to a year ago, as well as a decline in free cash flow generation over the period too.
- Global airline share prices rebounded by 10.0% in November, which broadly reversed the similar-sized fall seen in the previous month. However, concerns over the impact of rising costs on industry profitability have seen the global airline share price index underperform the wider equity market since the start of 2018.
- Oil and jet fuel prices fell sharply in November as concerns turned towards the oil market being oversupplied. At the time of writing, the Brent crude benchmark is around US$60/bbl – 30% below its early-October peak.
- The premium cabin has provided a useful buffer for airline financial performance over the past year or so, but there have been renewed signs of downward pressure on economy yields (recall that our series cover base fares only).
- The upward trend in passenger demand has moderated over the past six months or so, although the industry-wide passenger load factor remains elevated by historical standards. Meanwhile, despite downward pressure on the industry-wide freight load factor, cargo yields are still rising modestly.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
