Airline stocks outstripping equities by a factor of two

Airline stocks have outperformed global equity markets twice over in the last year as investors bet on a strong upturn in the embattled aviation industry, the International Air Transport Association (Iata) will say today.

Not only have carriers' shares risen twice as fast over the past 12 months, so far this year they are up by 13 per cent, compared with a 4 per cent fall in global equity markets, Iata says.

The positive investment climate is borne out by airlines' improving profitability. Second-quarter financial results for the world's 47 largest airlines show a net profit of $3.8bn (£2.45bn), some $4.8bn higher than the same period of 2009, Iata says.

Last week saw a string of strong results, including a quadrupling of profits at Air New Zealand in the first half, and profits up by 60 per cent at Air China.

Iata's global traffic figures show passenger demand up by 8 per cent and freight up by 17 per cent over the year to date. Although the growth rates are slightly lower than that recorded for the same period last year, they are still well above the 6 per cent average.

But the improvements are not evenly spread around the world. Airlines in the US and Asia-Pacific are seeing the largest improvements in terms of profits. And Europe is still the laggard in traffic growth compared with spectacular increases in Asia-Pacific, Latin America and the Middle East.