Airline share prices have risen more than 70 per cent from their lowest point at the beginning of last year, outperforming the broader equity market, as investors bet on a strong recovery in the highly cyclical aviation business.
As larger carriers reported stronger results amid growing passenger traffic, airline stocks climbed 73 per cent from the bottom of the cycle in the first quarter of 2009, the International Air Transport Association said in its latest financial monitor report. “Clearly financial markets are expecting much improved financial performance from airlines in the upturn phase of this cycle,” Iata said.
The airline industry has been steadily recovering after it was battered by the global downturn in 2008-2009 to the extent that Iata upgraded its forecasts in June to predict a collective industry annual net profit of $2.5bn this year, up from the $2.8bn loss it had forecast only in March.