Airline share prices have fallen 12 per cent so far this year as financial markets remain bearish, compared to a two per cent rise in worldwide share prices.
According to the International Air Transport Association (IATA)'s Airlines Financial Monitor May/June 2011 report, higher oil prices and slower economic growth would damage airline profits more than the profitability of most sectors.
The report said the first quarter net losses for airlines amounted to US$1.8 billion which was a similar loss to last year ending improvements of the past three quarters.
"The substantial improvements in airline profits seen from second quarter to fourth quarter 2010 have ended while fuel costs are now considerably higher and revenues are slowing," the report stated.
IATA's report also highlighted that air travel demand bounced back in May while freight demand was sluggish, projecting demands remained volatile on a slower trend of four per cent a year.
It also reported that passenger and freight capacity continued to expand unabated as capacity was more stable and load factors improved significantly in May, but added that risks of excess capacity remained.