Airline stocks have seen their share price soar 15 per cent so far this year, outperforming global equity markets, on the back of brighter prospects for the industry.

"Markets continue to anticipate better airline financial performance from restructuring efforts, as well as an easing in cost pressures from the recent decline in jet fuel prices," an International Air Transport Association (IATA) economics report said.

In May, worldwide airline share prices rose 2 per cent over April, although Asia‐Pacific carriers proved to be the exception as their share prices remained flat due to ongoing weakness on the cargo front and concerns over bird flu.

Globally, passenger demand has continued to grow ‐ with passenger capacity rising in tandem  ‐ while load factors remained close to 80 per cent in April. Passenger yields have also been improving since the beginning of the year.

"Growth in seats in April is running at an 8‐9 per cent annualised rate," the report said, adding that this was due to aircraft  being taken out of storage.

On the cargo side, freight volumes stabilised after two months of contraction although cargo load factors continue to lose ground. Another bright spot for the industry is that jet fuel prices were flat at US$115 per barrel in May, the lowest since mid‐2012. Prices have come down in recent months on weaker demand growth as well as increased supply from the US.

Source: AmFraser