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dre aviation Analysis: IATA Quarterly Business Confidence Index

Airline Profitability Analysis

dre aviation, Africa's Leading Airline Consultancy, have recently released their analysis of the IATA Quarterly Business Confidence Index.

"For the quarter ending September, we saw a dichotomy in the current business sentiment expressed by a number of airline CEOs & Heads of Cargo" explains Bharat Kumar, Airline Industry Analyst at dre aviation.  

Quarter on Quarter Performance

"At the macro level passenger demand grew marginally whilst cargo tonnage continued its decline and yields fell for both areas of the carriers' business units. 

Profitability at the macro level is also expected to be mixed, but expected to have fallen in the quarter. 

Going forward yields are expected to increase in Quarter 4 due to seasonal trends and increased demand in the traditional Christmas and New Year Season."

Forward Guidance On Airline Profitability

"However, there was some optimism going forward.

Of the 51% of the survey respondents that reported a slowdown in the last quarter only 27% saw the slowdown being prolonged over the next 12 months. 

Of the 10% that saw no change in the last quarter a larger percentage of 24% saw a year on year no change, on a year on year level this means that there will still be a recovery in profitability at the annualised level.

More optimistically, the 39% that indicated a profit improvement in the quarter rose to 49% for the full year.

In summary, we should see year on year profitability rise for the sector at the macro level."

We Believe African Airlines Remain Fragile

"Whilst the industry should be optimistic year on year the detailed analysis indicates that the weaker players could be getting weaker.  The worrying indicator is that 27% of the respondents see a weaker profitability performance in the next 12 months. With high level airlines collapsing in Europe we remain alert with regards to African airlines, the continent's airlines remain fragile, weak business plan and falling yields on the continent could push our airlines further into the red.  27% is by no means a small number and time will tell of the weaker airlines have the cash reserves to keep them flying".  dre aviation

Africa's Leading Airline Consultancy


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