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Cyclical upturn and the bigger picture

Cyclical upturn and the bigger picture. September 2010 Brian Pearce www.iata.org/economics. Markets rebound from Great Recession. Source: IATA. World trade upturn boosts air cargo. Source: IATA, Netherlands CPB. Freighter utilization peaking at high level. Source: IATA.

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Cyclical upturn and the bigger picture

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  1. Cyclical upturn and the bigger picture September 2010 Brian Pearce www.iata.org/economics

  2. Markets rebound from Great Recession Source: IATA

  3. World trade upturn boosts air cargo Source: IATA, Netherlands CPB

  4. Freighter utilization peaking at high level Source: IATA

  5. Business travel revives premium business Source: IATA, Haver

  6. Fares turning up but so are fuel prices Source: IATA and Platts

  7. Asset utilization not as good as it seems Source: IATA

  8. Capacity starting to outpace demand Source: IATA

  9. And there are big geographical differences Source: IATA

  10. Reflected in mixed operational cash flows Source: Bloomberg

  11. Some regions back in profit, some not Source: ICAO, IATA

  12. Overall industry profits see cyclical upturn Source: ICAO, IATA

  13. But significant structural gap remains Source: IATA

  14. There are supply chain issues Source: IATA ‘Value Chain Profitability’

  15. But majority of capital invested in airlines Source: IATA ‘Value Chain Profitability’

  16. Returns inadequate for whole value chain Source: IATA ‘Value Chain Profitability’

  17. US-EU 2nd Stage could have opened path for $5bn benefit from liberalized O&C US-EU Open Skies liberalisation Open Skies only O&C liberalisation (incremental benefits) Passengers: +26m +15-40m Economic benefits: €6-12bn €4bn Jobs: +70,000 +1,800-10,000 Source: Booz Allen Hamilton study

  18. M&A and JVs taking place but restructuring potential is limited Source: Bloomberg

  19. Alliances active but share stable at best Air China, China Southern, COPA and others Swiss, SAA, Aeroflot Source: IATA

  20. Exits exceeded by new entrants even in recession Source: Ascend

  21. Substantial value is created…but captured by customers and wider economy Source: IATA

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