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02 December 2023

Airlines pick up $1bn in equity in January: Iata

Markets react positively as airlines fare better in January. (AFP)

By Shweta Jain

Led by Asian and US carriers, world airlines raised $1billion (Dh3.67bn) cash in January, taking the total cash raised on the markets since early 2009 to over $31bn, and raising airline share price gains by five per cent in January as markets become more positive about airline performance. This was revealed in the airlines financial monitor report for December 2009-January 2010, released by International Air Transport Association (Iata).

Last year, airlines' equity prices rose 25 per cent, underperforming the market but allowing $30bn to be raised in cash, Iata said in January. "In the past month another $1bn of cash was raised by airlines in Asia and the US, including a small amount of equity in the Tiger Airways initial public offering," it added.

Only a few airlines have released Q4 financial data so far, but these quite consistently indicate a further improvement in performance during the second half of 2009. "Seasonal weakness in travel always depresses Q4 financials and we still expect an $11bn net loss for 2009 as a whole, but the comparison with Q4 2008 shows an improvement across geographical regions," it said.

Meanwhile, average fares on international markets continued to increase in response to fuller aircraft, Iata said, adding that the upturn in load factors, reaching record highs by the end of 2009, has tightened supply-demand conditions in international markets.

It added that as a result average fares are now starting to increase, though their upturn has lagged the rise in passenger numbers. "By October 2009 premium fares, which were more than 25 per cent down on the year at the start of Q2, had recovered to a level 10 per cent lower, while economy fares were five per cent lower than a year earlier.

"The seasonally-adjusted level of fares shows premium and economy were eight per cent to nine per cent up on early 2009 low points," Iata said, adding the level of average premium fares was still 20 per cent below what it was in early 2008 and economy fares were 10 per cent down. It will take "several years" for revenues to "recover", it added.


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