Iata reports airline share prices falling globally as fuel prices rise despite industry profitability improving in the first quarter of the year.

Airline association Iata reported a one-point improvement in operating margin year on year to an average 5.7% across 73 airlines, driven by a “pick up in performance” in Europe.

But in its latest Airlines Financial Monitor, Iata noted: “Investor concerns about the impact of rising fuel prices saw global airline share prices fall in May for the fourth month.”

The price of benchmark Brent crude oil touched £80 a barrel in May – its highest since November 2014 – before falling back slightly. Prices remained about 60% up year on year in early June.
Global airline share prices fell almost 3% in May and were down 8.5% since the start of the year.

Iata noted a fall in premium passenger revenues from 31.1% of total revenue in the first three months of last year to 30.6% in January-March 2018.

The fall in premium yields was most marked on the North Atlantic and Europe-Asia routes “where demand and fare growth have lagged behind economy class”.

Cargo volumes also appeared to stall, with Iata reporting “freight volumes have trended broadly sideways since August last year”.

However, overall passenger demand – as measured by revenue passenger kilometres (RPKs) – was up 6.2% year on year in April.

Iata reported passenger yields in the first quarter largely unchanged on a year ago, excluding revenue from surcharges and ancillary revenue.

It noted: “Additional sources of passenger revenue look to be paying a key role in supporting the robust financial performance of the industry.”

The number of seats in the world’s airline fleet rose 5.7% year on year to April, as 111 new aircraft were delivered and an additional 132 brought out of storage, with just 51 leaving the global fleet.