Deteriorating consumer confidence and economic uncertainty due to the European sovereign debt crisis and the growing likelihood of a protracted period of slow growth in developed economies is placing further pressure on the world’s airlines and their investors. Airline share prices have taken a battering amid concerns the world is re-entering a recession and on weaker earnings expectations, according to IATA. Jet fuel prices, while down from their Apr-2011 peak, continue to pressure the sector, while a slowing in travel volumes and falling freight demand are also of concern.

IATA, in its Aug/Sep-2011 Airlines Finance Monitor, stated airline share prices, measured using the Bloomberg Global Airlines Index, are now down 32% so far this year, compared with a 14% fall in the FTSE Global All-Cap index. Asia-Pacific airlines were hit hardest in Sep-2011, with US airline stocks the least affected. While equity markets in general have declined on a worldwide basis in Sep-2011, “airline stocks were marked down more than other sectors, as financial markets judged airline profits would be hit hardest by deteriorating economic conditions”, IATA said.