SINGAPORE (Bernama) – Moody’s Investors Service has changed its outlook on the global airline industry to positive from stable, saying the sharp drop in fuel costs will bolster financial performance.
Moody’s projects adjusted operating profit margins for the industry of 12-14 per cent in 2015 and 11.5-13.5 per cent in 2016, significantly above its estimate of 8.5-9.5 per cent for 2014.
Moody’s details its outlook change in the new report “Lower Fuel Costs to Boost Operating Profit Margins; Yield Growth Still Constrained.”
The outlook reflects Moody’s expectations for the fundamental business conditions in the industry over the next 12 to 18 months.
Moody’s Vice President, Senior Credit Officer Jonathan Root said: “US carriers will continue to garner the largest increases, leading to stronger performance relative to airlines based in increasingly competitive developing markets, and in Europe.”
The rating agency said passenger demand will also increase due to steady economic growth, higher disposable incomes and rising air travel in developing economies.