Airline cargo situation developpes negatively
The latest Q4 2018 financial data indicate that the intense squeeze on industry-wide airline profitability has moderated in the final quarter, with North American carriers seeing much smaller declines in EBIT margin compared to Q3 and Q2.
Airline share price movements were generally muted in February, underperforming the global equity index on both the industrywide and regional level. • Oil and jet fuel prices both moved higher for a second consecutive month, averaging around US$64/bbl and US$80/bbl, respectively in February. Given OPEC’s supply cuts and the Venezuela & Iran sanctions on one side and rising shale production in the US and indications of a moderation in global economic activity on the other, the oil price outlook remains uncertain.
There was a modest rise in overall base fare yields (excluding ancillaries and surcharges) this month, but the downwards trend remains in place. For the less price-sensitive premium cabin yields, airlines have been able to recover some of the previous rise in fuel and other costs. Guidance on yields for Q1 was positive, at least in the US.
Meanwhile, the story is less positive on the freight side, with annual growth in industry-wide freight tonne kilometres remaining in negative territory and SA volumes trending downwards.