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 released this week – shows that there are still headwinds to recovery.
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.
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