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Low oil prices lift airlines' share prices - International Air Transport Association

BUSINESS
By Philip Mwakio | January 18th 2015

Global airline share prices rose four per cent in December and are up 40 per cent for the year, helped by the decline in crude oil and jet fuel prices over recent months.

According to International Air Transport Association (IATA), crude oil prices halved by the end of 2014 and have fallen a further 17 per cent in January, reflecting appreciation of the US dollar as well as continued growth in supply.

“Crude oil prices have come down to $50 (Sh4,500) per barrel in January, the lowest price seen for the past 6 years,” said IATA in a statement.

After prices fell by half during 2014, they have declined a further 17 per cent in January compared to the end of last year. Jet fuel prices have followed suit, now sitting at just over $65 (Sh6,000)per barrel. Prices have been falling on the back of continuing growth in global supply, which has been outpacing growth in demand.

Oil Producing countries have declined decreasing production, contributing to the supply glut , placing pressure on other key producers like the US to reduce output.

Quarter three financial results show improvements in the US being partially offset by weakness in other regions.

The US passenger yields remain up on a year ago, but weakness continues in other regions. Air freight volumes continue to expand and the trend in air travel growth remains positive, supported by improving economic conditions in the US and strong trade growth in Asia Pacific.

Growth in available seats accelerated in November, but is still below the pace of growth in demand to support aircraft utilisation rates. Passenger load factors trended sideways in November, but air freight load factors continue to show steady improvement, supported by solid expansion in volumes according to the lobby.

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