IATA Reports Tough Year for Airlines, But Some Optimism

It’s no surprise that it’s been a tough year for airlines, but there are a few bright spots, according to the latest Airlines Financial Monitor from the International Air Transport Association. Airline share prices were 30 percent down from the start of 2011, but had begun to rally by the end of the year.

Airline profits worldwide for the fourth quarter were down 55 percent on last year. North American airlines were the exception and showed improved performance as they more than doubled their profits compared to the same period in 2010.

Passenger load factors are starting to fall because aircraft deliveries are pushing capacity growth above demand.

Fuel prices remain high. While they are down 9 percent from their peak in the second quarter, they are still up 14 percent on the year due to Asian demand and a squeeze in supply.

Passenger yields were rising through the fourth quarter, largely to recover fuel costs, supported so far by high load factors. But if capacity continues to grow, that could hurt profits.

Passenger travel also rose in December to a level 5.4 percent higher than the same month in the previous year. But the trend since mid-year has now clearly slowed, and the impacts of weakening consumer confidence throughout 2011 are finally showing.