Global Airlines Financial Monitor: January 2018

The initial airline financial results from the final quarter of 2017 indicate that the industry-wide EBIT profit margin remained broadly unchanged during Q4 relative to the same period in 2016, at a robust 10.7% of revenues.
Global airline share prices rose by 2.9% in January, with increases in Europe and Asia offsetting a modest decline in N. America. The airline index has fallen broadly in line with the global equity market during the early-Feb sell-off.
Industry-wide passenger yields in late-2017 were largely unchanged in year-on-year terms. We forecast passenger yields to rise modestly in 2018 alongside a strengthening in global economic activity and rises in key input costs.
Oil prices rose to a three-year high during January, but fell back sharply in early-February driven by record-high levels of oil production in the US. At the time of writing, the Brent crude oil price is currently around $63/bbl.
Passenger and freight volumes grew by 7.6% and 9.0% respectively in 2017 as a whole and are both carrying solid momentum into 2018. The passenger load factor posted a record high for a calendar year in 2017 (81.4%), while the freight load factor climbed by 2.5 percentage points compared to 2016.
Stronger global trade conditions have helped to support premium-class demand. Premium’s share of total international passenger revenues increased to 27.0% in the first 11 months of 2017, up from 25.9% a year ago.