North American airlines earned $1.74 billion in the quarter to lead the world's regions (ATW Daily News, Aug. 18), turned around from a $514 million deficit in the three months ended June 30, 2009, the organization said in its latest "Airlines Financial Monitor." Asia/Pacific carriers followed with a $1.16 billion second-quarter profit, rebounding from a $322 million loss last year. European carriers posted a $1.02 billion profit for the period, but IATA noted that figure was boosted by $1.27 million in asset sales gains primarily by Air France KLM related to the sale of holdings in Amadeus (ATW Daily News, July 28).

Without the Amadeus stake sale, "there would have been further losses" in Europe, IATA said. Europe's airlines lost $548 million in last year's second quarter. Latin American airlines reported a $36 million net loss for the 2010 second quarter, reversed from a $509 million profit in the prior-year period.

IATA noted jet fuel markets have been "unusually tranquil" over the past 12 months, with a "flat trend" of $76/barrel oil prices and $87/barrel jet fuel prices largely remaining steady. "Forward curves and most forecasts suggest relatively little change [in fuel prices] in the next year, but the long-term trend remains upward," the organization said.

It pointed out capacity is starting to return to both passenger and airfreight markets. "Lots of new aircraft have been ordered at recent air shows and aircraft are being taken out of storage," it said. "There is a threat of excess capacity. However, published schedules suggest capacity growth will remain in line with demand."

While load factors remain high, IATA asserted that "adjusted for seasonality it becomes clear that passenger load factors peaked in February. Since then, capacity grew by a slightly faster pace than demand." But it noted, "Threats of excess capacity appear less evident in the freight sector than in the passenger business."

The organization said passenger fares have not rebounded in line with volume, which has returned to pre-recession levels. Economy fares on average are 5% below early 2008 peaks while premium fares "remain some 20% below pre-recession highs," it noted, adding that "stabilizing load factors…are slowing the recent rise in fares."

Source: ATWonline