Business confidence index

IATA’s quarterly business confidence survey of airline Chief Financial Officers and heads of cargo provides an invaluable forward-looking view of key financial and demand indicators. It is similar to confidence surveys that are conducted for the manufacturing and service sectors in several major economies.

The latest survey shows:

• Airlines continue to report losses during the period through mid-2009 and do not expect conditions to improve for the next 12 months.  The deep recession has maintained downward pressure on traffic volumes and yields in Q2, according to survey respondents.  Efforts to resize capacity to better match demand and cut costs have helped but have trailed behind the fall in traffic.  The expectations reported for the next 12 months have dipped into pessimism once more.  Uncertainty around the timing of recovery and the likely level of fuel prices compound the challenges facing airlines.  There is variation in outlook across the regions with Asia on balance now more optimistic than the mood in other parts of the world.
• Both passenger and cargo traffic volumes continued to fall over the last three months, however expectations for the year ahead are for more stability from now on.  Expectations for yields remain weak on both the passenger and cargo sides of the business and while input costs continued to fall in Q2, the expectation forward is now for rises in the year ahead.
• The bulk of respondents report falls in employment levels in Q2 for the first time in this cycle and expect this to continue in the 12 months ahead.