Moody's: Stable Outlook for Global Airline Industry, Despite High Fuel Costs

by CFO Innovation Asia Staff, 02 July 2012

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Despite still high fuel costs and the weak economic environment, the outlook for the global airline industry is stable, says Moody's Investors Service in its latest annual outlook on the global airline industry.

"High fuel costs and jitters over the global economy will limit operating profit growth for the airline industry," says Jonathan Root, a Moody's Vice President -- Senior Credit Officer. "Still, North American and Middle Eastern carriers could see some modest profit improvement as European carriers struggle with a weak environment and Asian operators face intensifying competition."

Moody's industry outlooks reflect the rating agency's expectations for fundamental business conditions in the industry over the next 12 to 18 months.

Moody's does not expect increases in fares as long as key benchmark Brent crude oil remains below $110 per barrel. In addition, absent any increase in demand for air travel, there's little support to boost prices, says Moody's.

Slowing growth in passenger demand is likely as economic uncertainties weigh on business confidence and corporate travel budgets. Slowing growth in revenue passenger kilometers will be the norm into 2013, says Moody's.

The stable outlook also incorporates Moody's expectations that airlines—despite significant deliveries of new aircraft—will maintain capacity discipline with the majority of new planes replacing less fuel efficient models.

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A bad news for virgin flight

Submitted by Helen T. Prentice on 8 May 2013 - 10:56am

A bad news for virgin flight airline company that the fuel costs high but for me, they have no problems for that thing.

Imagine that you have to

Submitted by Dexter Malfoy on 24 September 2012 - 4:52am

Imagine that you have to travel to the cook islands and you are quite far away. You will need to fly there if you want to save time.

As long as some people still

Submitted by Ambrosia Divine on 17 September 2012 - 2:43pm

As long as some people still afford to travel around Europe, well, I would say that airline companies are still going to be profitable.

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