World: Airline executives gather at IATA convention and look for answers

The airline industry has finally shaken off its boom-and-bust past, says the head of the world’s largest carrier, but investors aren’t buying it because familiar signs of trouble loom on the horizon. Global air fares are falling as carriers add ever more aircraft, and low oil prices, which helped airlines land record profits of $33b last year, are inching higher. In addition, terrorism fears are weighing on bookings and, even as more passengers take to the skies, growth is stalling in some regions. It’s a challenging mix for the 200-plus airline executives gathering in Dublin this week for the industry’s annual jamboree hosted by the IATA. The message they’d like to deliver echoes that of American Airlines CE Doug Parker in a speech in March. “We have an industry that also can be a real business like other businesses,” said Parker, who has spearheaded much of the consolidation that’s allowed airlines to become more efficient, and last year earn more than their cost of capital for the first time. “The airline business has been fundamentally and structurally transformed and the valuations do not reflect such a transformation,” he said. “They’re not even close.” Investors have shrugged and headed for the exits, dragging an index of global airline stocks down 6.4% since the start of the year. US carriers have been hit hardest, with Parker’s American shedding a quarter of its value even as it poured profits into stock buybacks. Demand isn’t the problem. Global passenger numbers rose 7% in the first quarter from a year earlier, driven largely by growth among carriers in Asia and the Middle East. Fliers are paying less, with global fares down an average 4% through April and are particularly weak on trans-Atlantic flights and in the US.<br/>