Windhoek-Global airline share prices ended 2017 almost 29 percent higher than where they started, with sizeable gains for European and Asia Pacific airlines. Airline shares outperformed the global equity market by 7 percentage points.
According to the latest figures from the International Air Transport Association’s (IATA’s) Airlines Financial Monitor, global airline share prices ended last year strongly, rising by a further 4.4 percent in December. The result means that global airline shares increased by almost 29 percent over the course of 2017, outperforming the wider equity market by seven percentage points.
IATA figures indicate that the European airline index finished the year 68 percent higher than where it started, as shares recovered from the Brexit-hit 2016, helped by a robust regional economic and passenger demand backdrop. “The Asia Pacific index also rose strongly (39 percent), partly reflecting stronger cargo market performance. The North American index had a more mixed year, but shares rallied at year-end in line with the wider equity market after the Trump tax plan was passed,” reads the monitor.
The final releases of financial data from Q3 further underlined that the industry-wide Earnings Before Interest and Tax (EBIT) margin was broadly unchanged in Q3 compared to the same period a year ago, at a robust 14.7 percent.
The IATA monitor further shows that all regions posted double-digit operating margins in the quarter, led by European carriers at 19.7 percent but bearing in mind that Q3 is a seasonal peak month for European airline profitability each year.
In a sign that industry profitability is now stabilising from the weaker first half of last year, every region except North America registered a year-on-year increase in operating margin.
The industry-wide EBIT profit margin remained broadly unchanged in Q3 relative to a year ago, at 14.7 percent of revenue. A decline in the margin in the North America region was partly offset by increases elsewhere.
Meanwhile, industry-wide passenger yields are currently broadly unchanged from where they were a year ago. “Against a backdrop of robust global economic growth, and rising input costs, we forecast yields to rise modestly in 2018,” reads the IATA monitor.
“Year-on-year growth in both passenger and freight volumes is carrying solid momentum into 2018, alongside elevated load factors: the seasonally adjusted (SA) passenger load factor rose above 82 percent for the first time on record in November, while the SA freight load factor is continuing to maintain levels last seen in late-2014,” stated IATA.
The organisation’s economics division feels that the ongoing pick-up in global trade conditions is continuing to support premium-class demand, particularly on some key markets to, from, and within the important manufacturing region of Asia.