This semi-annual report takes a broad look at how the airline industry is adding value for its consumers, the wider economy and governments, as well as for its investors.
- World trade has weakened sharply, damaging cargo, but fiscal policy is providing stimulus so GDP growth remains supportive.
- Rising costs, particularly fuel, and the ability to recover those costs will remain a major challenge for the industry.
- Airlines continue to create value for investors, but only just, with ROIC falling to 7.4% in 2019, marginally above the cost of capital.
- Some airlines continue to generate free cash flow but not the industry in aggregate. Debt ratios begin to rise again this year.
- N American airlines perform best with a 5.5% net post-tax profit margin in 2019. Middle East the weakest with a 1.9% loss.
- Employment growth remains strong and jobs in the industry should exceed 2.9 million, and GVA per employee is over $98,600.
- Consumers benefit from lower real travel costs, more routes, and will spend 1% of world GDP on air transport in 2019.
- Economic development is stimulated by the doubling of city pairs and halving of air transport costs over the past 20 years.
- Governments gain from $129bn of tax in 2019 and from over 70 million ‘supply chain’ jobs.