OREANDA-NEWS. Fitch Ratings' 2016 outlook for the Australian airlines sector is stable, based on a return to rational competitive behaviour and a focus on balance-sheet strength.

Fitch expects Australian airlines' earnings to rise, driven mainly by improved operational efficiency in domestic operations and lower fuel prices. The agency believes better domestic market conditions will continue as the airlines return to rational competitive behaviour and capacity discipline. We expect this to result in improvements in domestic yield and load factors. We also expect better results from the international operations as the airlines address operational inefficiencies and structural changes in the market.

Fitch believes Australian airlines will consolidate their improved financial position in 2016, benefitting from the benign competition, a structural decline in fuel prices, and the improvement in profitability. This is supported by a continued focus on leverage and return on invested capital targets.