For the third quarter (Q3) of the year, airlines’ financial losses – compared with pre-COVID levels in 2019 – have diminished compared with Q2, with some carriers reporting their first profitable quarter since the COVID-19 crisis.
But Iata’s Airlines Financial Monitor report for Q3 – released this week – shows that there are still headwinds to recovery.
The quarterly Airlines Financial Monitor report looks at a sample of airlines across the globe, evaluating them in terms of economic performance and pressures. This gives an indication of the overall aviation picture.
In the sample of 27 airlines for the latest report, the industry-wide EBIT (earnings before interest and taxes) margin improved to -2% of revenues in Q3.
Iata Economics noted that the improvement had been driven by passenger travel recovery on some domestic and short-haul routes where travel restrictions had been lifted during the traditionally busy Q3.
Furthermore, total airline revenues declined by 30% – a robust improvement on the 46% decline in Q2.
The report further noted that operating costs fell by 18%, other variable costs have also been returning with the traffic restart, reinforcing the need for all partners in the air transport supply chain to carefully manage costs in a still weak revenue environment.
Amongst others, sharp increase in the jet fuel price has been putting an upward pressure on airlines’ operating costs and represents a risk to a further recovery in the industry’s profitability during Q4. Additional challenges come from rising infrastructure costs, according to Iata Economics.