Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>We update forecasts for the European airline sector, highlighting it will be difficult for most carriers to grow earnings in 2023.</li>
<li>We publish detailed earnings bridges highlighting the damage to full year earnings from structural damage to 1Q results due to inflationary pressure and the loss of corporate traffic</li>
<li>This also suggests opportunities for the sector to address winter woes to supplement strong summer performances.</li>
</ul>


We update forecasts for the European airline sector, highlighting it will be difficult for most carriers to grow earnings in 2023.
We publish detailed earnings bridges highlighting the damage to full year earnings from structural damage to 1Q results due to inflationary pressure and the loss of corporate traffic
This also suggests opportunities for the sector to address winter woes to supplement strong summer performances.


European Airlines – The Ravages of Increased Earnings Seasonality

<ul>
<li>We refresh estimates on AF-KLM, IAG, Lufthansa following Singapore Airlines's effective profit warning, noting higher fuel prices make margin protection more difficult.</li>
<li>Our 2024 EBIT estimates are 7% ahead of consensus at €2.0bn for AF-KLM, 6% ahead at €3.6bn for IAG and 5% behind at €2.5bn for Lufthansa.</li>
<li>Lufthansa has highest-in-class capacity growth, with its biggest focus on APAC while APAC yield weakness prompts margin management concerns as ground handlers strike.</li>
</ul>


We refresh estimates on AF-KLM, IAG, Lufthansa following Singapore Airlines's effective profit warning, noting higher fuel prices make margin protection more difficult.
Our 2024 EBIT estimates are 7% ahead of consensus at €2.0bn for AF-KLM, 6% ahead at €3.6bn for IAG and 5% behind at €2.5bn for Lufthansa.
Lufthansa has highest-in-class capacity growth, with its biggest focus on APAC while APAC yield weakness prompts margin management concerns as ground handlers strike.


European Airlines - Difficult to Avoid Long Haul Earnings Declines in 2024

<ul>
<li>Lufthansa mainline losses in 2024 force management to pursue transformation</li>
<li>​Portfolio management challenges driven by a variety of factors including LH mainline unit costs and pricing at sister companies</li>
<li>Much work to do to turn ITA around, while firm management focus is required at home</li>
</ul>


Lufthansa mainline losses in 2024 force management to pursue transformation
​Portfolio management challenges driven by a variety of factors including LH mainline unit costs and pricing at sister companies
Much work to do to turn ITA around, while firm management focus is required at home


Lufthansa Group – Revisiting Margin and Portfolio Management Challenges

<ul>
<li>Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.</li>
<li>We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.</li>
<li>IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.</li>
</ul>


Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.


European Airlines - Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial

<ul>
<li>As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.</li>
<li>In a strong year for the global industry, heavy 2023 losses prompt questions over ITA's financial sustainability with Lufthansa support.</li>
<li>We highlight that ITA's problems are in revenue generation rather than operational efficiency.</li>
</ul>


As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
In a strong year for the global industry, heavy 2023 losses prompt questions over ITA's financial sustainability with Lufthansa support.
We highlight that ITA's problems are in revenue generation rather than operational efficiency.


Lufthansa - ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

Germany

Deutsche Lufthansa Aktiengesellschaft provides passenger and cargo air transportation services worldwide. The Company offers flight and connection programs in North America, Scandinavia, and Asia. Deutsche Lufthansa also provides travel agency, catering, and aircraft maintenance services.

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Deutsche Lufthansa (LHA GR)

European Airlines – The Ravages of Increased Earnings Seasonality

Deep dive into winter loss-making for the European airline sector, with structural changes due to corporate traffic loss and inflation. These...

Neil Glynn

European Airlines - Difficult to Avoid Long Haul Earnings Declines in 2024

Deep dive on European flag carrier earnings prospects in 2024 featuring quarterly earnings bridges, in-depth fare and capacity growth analysis.

Neil Glynn

Lufthansa Group – Revisiting Margin and Portfolio Management Challenges

Lufthansa's latest profit warning includes the message that Lufthansa mainline needs a transformation programme. We outline the issues at LH...

Neil Glynn

European Airlines - Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial

We re-highlight our recent forecast cuts at Air France-KLM and Lufthansa following Air France-KLM's profit warning today, which was due to the...

Neil Glynn

Lufthansa - ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

In-depth analysis of planned Lufthansa acquisition ITA Airways illustrates a big challenge for the carrier to achieve financial sustainability

Neil Glynn

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