The survey also highlighted a divergence between more positive Asian airlines and more pessimistic European carriers, but for the first time since January 2008, a majority said profitability had improved in the previous quarter.
A full 76 per cent of those surveyed expect profitability to improve over the next 12 months. But IATA cautioned that this measures the direction of change, not levels, so these results are showing that airlines expect a significant narrowing of losses in 2010, but not necessarily a return to profit.
IATA’s own forecast predicts that airline net losses will halve from US$11 billion in 2009 to $5.6 billion in 2010.
There was a particularly sharp improvement in both cargo and passenger demand during the previous quarter, with the majority of airlines switching from reporting declining demand to rising demand. Expectations for improvements in demand over 2010 have risen back to levels last seen in 2007, with 72 per cent of airlines expecting improved cargo demand and over 82 per cent expecting further gains in passenger demand.
“Of course stronger demand does not always lead to profits, or reduced losses,†IATA added. While airlines reported that unit costs remained relatively low in the previous quarter, a net balance of airlines are now expecting cost pressures to intensify over the next 12 months.
But, IATA also observed there is more optimism over yields suggesting that an improvement in margins is expected. There was still a majority of airlines reporting lower yields in the previous quarter, but this was significantly smaller than in October and expectations for the next 12 months are at a high.
“The results of this quarter’s survey mark a sharp improvement in the business environment for airlines. But it should be noted that this is an improvement from a very weak base, so although airlines expect the pace of improvement to be as strong as in 2007, it will still take many quarters before demand, yields and revenues recover to levels seen early in 2008, let alone catching up with the 2-3 years of growth lost due to the recession.â€Â