Industry Outlook Presentation September 2011

8/3/2019 Industry Outlook Presentation September 2011

1/18

To represent, lead and serve the airline industry

Updated outlook for theglobal airline industry

September 2011IATA Economicswww.iata.org/economics
http://www.iata.org/economicshttp://www.iata.org/economics


2/18

Cash flows are being squeezed

-5%

0%

5%

10%

15%

20%

2005 2006 2007 2008 2009 2010 2011

%revenues

EBITDA as % revenuesseasonally adjusted

USairlines

Asia-Pacificairlines

Europeanairlines


3/18

550

600

650

700

750

800

850

900

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011

Averagein

ternationalreturnfare,

US$

Jetkero

senprices,US$perbarrel

Fuel prices and average fares

Jet kerosene price

(left scale)

Average return fare

(right scale)

Mainly by the rise in fuel costs


4/18

But also due to faltering asset utilization

7.6

7.7

7.8

7.9

8.0

8.1

8.2

8.3

8.4

8.5

8.6

10.2

10.4

10.6

10.8

11.0

11.2

11.4

11.6

2007 2008 2009 2010 2011

Singleaisleaveragedailyhour

sflown

Twinais

leaveragedailyhoursflown

Aircraft utilization

Twin aisle aircraft

(left scale)

Single aisle

aircraft (right

scale)


5/18

Particularly on freight markets

38%

40%

42%

44%

46%

48%

50%

52%

70%

72%

74%

76%

78%

80%

82%

84%

2007 2008 2009 2010 2011

Freightloadfactor,%AFT

Ks

Passengerloadfactor,%ASKs

Total load factors on passenger and freight marketsSeasonally adjusted

Source: IATA

Passengerload factor

Freightload factor


6/18

Fleet changes adding seats at 8%annualized rate

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

-200

-150

-100

-50

0

50

100

150

%chan

geinairlineseats

Changeinoper

atingfleet(a/cper

month)

Airline fleet developmentSource: Ascend

Deliveries Other factors Storage activity % change in seats m-o-m


7/18

Travel has held up but outlook is weaker

-15%

-10%

-5%

0%

5%

10%

15%

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011

%

changeoveryear

Index

ofbusinessconfide

nce

Worldwide growth in air travel and business confidence

Growth in RPKs(right scale)

Businessconfidence(left scale)


8/18

Freight markets have stopped growing

11

12

13

14

15

16

17

115

125

135

145

155

165

175

2007 2008 2009 2010 2011

Airfre

ightFTKs,billionspe

rmonth

Worldtradevolume,

200

0=100

Air freight volumes and world trade

World trade

(left scale)

Air freight volumes

(right scale)


9/18

Global growth slowing towards critical level

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

-6%

-5%

-4%

-3%

-2%

-1%

1%

2%

3%

4%

5%

6%

1970 1975 1980 1985 1990 1995 2000 2005 2010

WorldGDPgrowth

Netpost-taxprofitsas%revenues

World economic growth and airline profit margins

Net post-

tax profitmargin

Worldeconomicgrowth


10/18

Financial markets expect defaults in Europe

0

2

4

6

8

10

12

14

16

18

Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011

Government bond yields in Europe

Greece

Ireland

Portugal

Spain

Italy

France

UK

Germany


11/18

The euro zone crisis

Continue to muddle through?Modest haircuts for investorsAgreement to meet FR/IR/PO borrowing needs

If multi-year reforms/austerity implemented

Insufficient to restore solvency

Failed to stop contagion to Italy and SpainECB intervening directly in bond markets

Inflation risk or recession if intervention stopped

An orderly debt default?Need to recapitalize banks in periphery and coreEFSF designed for needs of small group

A disorderly debt default?Contagion/banking crisis

Unilateral action required trigger for Euro breakup?


12/18

Will reinforce medium-term geographicalshifts driven by growth of middle incomes

Global middle class in 2009 and prediction for 2030


13/18

And the potential to better connect largecities, particularly in ASPAC and LATAM

Source: UN, SRS Analyser

5-10 mln

10-15 mln

15-20 mln

> 20 mln

Urban Popn. 2015


14/18

Short-term will add to growth disparities

-1

0

1

2

3

4

5

6

7

8

9

Euro area US Japan Latin America MENA Asia ex Japan

EIU's forecasts for GDP growth

2010

2011

2012


15/18

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012

Brent crude oil price and forecasts, US$/b

Futures

19 Sep

Highest

Bloomberg

forecast

Lowest

Bloomberg

forecast

Fuel costs expected to stay relatively high


16/18

0

10

20

30

40

50

60

70

80

90

100

M

ar2006

S

ep2006

Apr2007

Oct2007

Apr2008

Oct2008

Apr2009

Oct2009

Apr2010

Oct2010

Apr2011W

eighte

dScore(50=N

oChange)

Last Three Months

Next Twelve Months

Airline profit expectations weak but positive

Do you expect profitability to improve, decline or not change?


17/18

0

10

20

30

4050

60

70

80

90

100

Mar2006

Sep2006

Apr2007

Oct2007

Apr2008

Oct2008

Apr2009

Oct2009

Apr2010

Oct2010

Apr2011

Weighted

Score

IATA survey of CFOsVolumes - next 12months

Yields - next 12months

Expectations for slower volumes, soft yields


18/18

In this environment we expect profits to bepositive but not strong

-30

-25

-20

-15

-10

-5

0

5

10

15

20

-9.0

-6.0

-3.0

0.0

3.0

6.0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011F

2012F

US$billion

%

revenues

Global commercial airline profitability

Net post-tax losses(right scale)

EBIT margin(left scale)

Documents

Industry Outlook Presentation September 2011