Southeast Asian Airlines: 80% were unprofitable in 1H2014 but conditions are starting to improve
Southeast Asian Airlines have faced extremely challenging MARKET conditions in 2014, resulting in an alarming amount of red ink. Of the 17 Airlines in Southeast Asia that report earnings only four posted operating profits in 1H2014 compared to 12 in 1H2013.
Among the nearly 50 Airlines based in Southeast Asia, excluding small regional and charter operators, approximately 80% were not profitable in 1H2014. Losses are likely to continue through at least 3Q2014 but there are indications MARKET conditions will start to improve by 4Q2014 or 1H2015.
Several Southeast Asian Airlines have responded to overcapacity by and cutting capacity or slowing their expansion. MARKETS that have seen political and economic instability are also starting to stabilise.
Southeast Asian market has suffered from overcapacity since 2H2013
The Southeast Asian Airline sector has generally been profitable in recent years, particularly the larger Airlines or groups which account for the majority of capacity. Rapid economic growth and an expanding middle class have provided an ideal foundation for passenger growth and until this year profitability.
The overcapacity problems peaked in 1H2014 as new Aircraft continued to be added at a rapid pace
The same favourable MARKET fundamentals are still there but conditions started deteriorating in 2H2013, when already rapid capacity growth accelerated while demand in some countries started to slow. Most markets in Southeast Asia have since suffered from overcapacity. The overcapacity problems peaked in 1H2014 as new Aircraft continued to be added at a rapid pace.
Meanwhile political instability in Thailand, which is Southeast Asia’s second largest market based on system-wide capacity, impacted demand throughout 1H2014. The rapid depreciation of the Indonesian rupiah also has impacted demand and profitability in the region’s largest market, Indonesia since 2H2013. Meanwhile the MH370 incident has impacted inbound visitor traffic throughout Southeast Asia from the region’s largest and fastest growing source market, China, since late 1Q2014.
Southeast Asia’s publicly traded Airlines incurred operating losses of over USD600 million in 1H2014
Only four of the 17 publicly TRADED Airlines or subsidiaries in Southeast Asia were profitable on an operating basis in 1H2014 Cebu Pacific, Malaysia AirAsia, Philippine Airlines (PAL) and SilkAir. One of the other 13 Airlines was break even Thai AirAsia while 12 reported operating losses. Of these 13, nine had been profitable in 1H2013.
Combined this sampling of 17 Airlines incurred operating losses of about USD660 million in 1H2014 compared to an operating profit of about USD370 million in 1H2013. As a result there was a year over year swing of over USD1 billion at the operating or EBIT level.
This sample of 17 Airlines includes subsidiaries or affiliates that report figures along with their parent company results. But it excludes subsidiaries of publicly TRADED groups that do not report results such as Scoot and Firefly. Jetstar Asia, which is part of Australia’s Qantas Group, is excluded because only full year data is provided.
Philipines Aviation News,
Southeast Asian Airlines News,
East Asia Airlines,
Southeast Asia Cheap Flights,
Sea Air Airlines Philippines,
Budget Airlines Southeast Asia,
Southeast Asian Airlines Philippines,
Southeast Asian Airlines Careers,
East Asia Airlines,
Mohini Porwal [ B Sc]
Trainee News Editor
Philipines Aviation News Editor
www.Philippine-Aviation-News.blogspot.com
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WWW.Indian-Aviation-News.blogspot.com
Southeast Asian Airlines have faced extremely challenging MARKET conditions in 2014, resulting in an alarming amount of red ink. Of the 17 Airlines in Southeast Asia that report earnings only four posted operating profits in 1H2014 compared to 12 in 1H2013.
Among the nearly 50 Airlines based in Southeast Asia, excluding small regional and charter operators, approximately 80% were not profitable in 1H2014. Losses are likely to continue through at least 3Q2014 but there are indications MARKET conditions will start to improve by 4Q2014 or 1H2015.
Several Southeast Asian Airlines have responded to overcapacity by and cutting capacity or slowing their expansion. MARKETS that have seen political and economic instability are also starting to stabilise.
Southeast Asian market has suffered from overcapacity since 2H2013
The Southeast Asian Airline sector has generally been profitable in recent years, particularly the larger Airlines or groups which account for the majority of capacity. Rapid economic growth and an expanding middle class have provided an ideal foundation for passenger growth and until this year profitability.
The overcapacity problems peaked in 1H2014 as new Aircraft continued to be added at a rapid pace
The same favourable MARKET fundamentals are still there but conditions started deteriorating in 2H2013, when already rapid capacity growth accelerated while demand in some countries started to slow. Most markets in Southeast Asia have since suffered from overcapacity. The overcapacity problems peaked in 1H2014 as new Aircraft continued to be added at a rapid pace.
Meanwhile political instability in Thailand, which is Southeast Asia’s second largest market based on system-wide capacity, impacted demand throughout 1H2014. The rapid depreciation of the Indonesian rupiah also has impacted demand and profitability in the region’s largest market, Indonesia since 2H2013. Meanwhile the MH370 incident has impacted inbound visitor traffic throughout Southeast Asia from the region’s largest and fastest growing source market, China, since late 1Q2014.
Southeast Asia’s publicly traded Airlines incurred operating losses of over USD600 million in 1H2014
Only four of the 17 publicly TRADED Airlines or subsidiaries in Southeast Asia were profitable on an operating basis in 1H2014 Cebu Pacific, Malaysia AirAsia, Philippine Airlines (PAL) and SilkAir. One of the other 13 Airlines was break even Thai AirAsia while 12 reported operating losses. Of these 13, nine had been profitable in 1H2013.
Combined this sampling of 17 Airlines incurred operating losses of about USD660 million in 1H2014 compared to an operating profit of about USD370 million in 1H2013. As a result there was a year over year swing of over USD1 billion at the operating or EBIT level.
This sample of 17 Airlines includes subsidiaries or affiliates that report figures along with their parent company results. But it excludes subsidiaries of publicly TRADED groups that do not report results such as Scoot and Firefly. Jetstar Asia, which is part of Australia’s Qantas Group, is excluded because only full year data is provided.
Philipines Aviation News,
Southeast Asian Airlines News,
East Asia Airlines,
Southeast Asia Cheap Flights,
Sea Air Airlines Philippines,
Budget Airlines Southeast Asia,
Southeast Asian Airlines Philippines,
Southeast Asian Airlines Careers,
East Asia Airlines,
Mohini Porwal [ B Sc]
Trainee News Editor
Philipines Aviation News Editor
www.Philippine-Aviation-News.blogspot.com
mohini.aerosoft@gmail.com
https://www.facebook.com/profile.php?id=100005944964687
www.AeroSoft.co.in
www.Philippine-Aviation-News.blogspot.com
www.Newzealand-Aviation-News.blogspot.com
www.Aviation-News-India.blogspot.com
www.Canadian-Aviation-News.blogspot.com
WWW.Indian-Aviation-News.blogspot.com
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