LONDON — The airline industry lost more than $6 billion in the first half of the year, but there are signs that passenger numbers and air-freight volumes are improving, the International Air Transport Association said Tuesday.
In its bimonthly report on the financial health of the industry, IATA said airlines posted a combined net loss of $2 billion in the second quarter following $4 billion in losses in the first quarter.
Its sample of airlines was incomplete, so IATA — which represents 230 airlines world-wide that account for roughly 93% of scheduled international air traffic — estimates that losses exceeded $6 billion.
Passenger numbers and freight volumes in July climbed 3% from June, but both remain below year-ago levels. “There was a material improvement (in travel) in July, but the future path is likely to be volatile and weaker than normal recoveries,” the report said.
Cuts in capacity have failed to keep pace with the drop in demand. Load factor, or the proportion of available seats that airlines fill with paying passengers, was 80.3% in July and could mark the high point for the year as the industry moves into a seasonally weak period and published schedules suggest some capacity growth ahead, IATA said.
“Elimination of excess capacity will be the key to stopping the decline in fares and stabilizing revenues as well as volumes,” IATA added.
Air-freight capacity utilization in July rose to 47.6% from a low of 40% in January, but excess capacity continued to drive down rates, which fell more than 20% year-on-year.
A spike in jet-fuel prices in August was worrying, even though some airlines reported mark-to-market gains on fuel hedging. “However, cash flows tell another story,” the report said. “The cash impact of higher fuel prices remains negative, and particularly damaging given declines in passenger and cargo yields.”
Airlines in the first half took advantage of higher share prices to refill their coffers. They have pocketed $3 billion in new equity and $12 billion from debt issues. Airline share prices in August were up 7.4% since the start of the year.