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Airlines Financial Monitor – October 2015

Key points from our full report on airline financial performance in September-October
•Worldwide airline share prices were up 9% in October compared to September, supported by low jet fuel prices and strong Q3 profit results. Airline shares outperformed the broader market which was up 7% over the month;
•The financial performance of the airline industry has remained solid, with initial Q3 results showing large profit improvements in all major regions;
•Crude oil prices stayed below $50/bbl in October, kept down by expectations of supply increases from Iran and the US as well as a softer demand outlook;
•Passenger yields in the US continue to fall and although the US$ appreciation has exaggerated declines in global fares, currency-adjusted levels are also down, by 6% on a year ago;
•Weakness in the currency-adjusted yields and fares reflects downward pressure from factors including the decline in fuel costs and stronger growth in capacity relative to demand in some regions;
•RPK volumes expanded further in September and FTKs increased after months of decline, but the pick-up was narrowly based;
•Growth in the number of seats slowed in September, well below expansion in demand, which should help support aircraft utilization rates;
•Passenger loads fell slightly in September, but remain very close to the record high achieved in August (80.6%, seasonally adjusted). By contrast, freight load factors remain at low levels not seen since mid-2009.

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