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

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International Consolidated Airlines Group / Equity Bottom-Up

International Consolidated Airlines Group

<ul>
<li>We publish quarterly earnings bridges through 1Q-4Q24 for Air France-KLM, IAG and Lufthansa, which illustrate 1Q will be difficult yoy.</li>
<li>This renders forward commentary extremely important and summer pricing prospects are encouraging. Delta kicks off airline reporting season globally on 10 April and is likely to set a bullish tone</li>
<li>However the European low cost carriers easyJet, Ryanair and Wizz Air are seeing greater earnings momentum than the flag carriers given short haul fare strength.</li>
</ul>


We publish quarterly earnings bridges through 1Q-4Q24 for Air France-KLM, IAG and Lufthansa, which illustrate 1Q will be difficult yoy.
This renders forward commentary extremely important and summer pricing prospects are encouraging. Delta kicks off airline reporting season globally on 10 April and is likely to set a bullish tone
However the European low cost carriers easyJet, Ryanair and Wizz Air are seeing greater earnings momentum than the flag carriers given short haul fare strength.


European Airlines – Bridging Flag Carrier 1Q24 and 2024 Prospects

<ul>
<li>Following AF-KLM and IAG results we refresh our forecasts, and our detailed quarterly bridge analysis in 2024 suggests each can grow earnings this year.</li>
<li>IAG clearly differentiates itself from AF-KLM with strong FCF generation while AF-KLM is unlikely to generate positive FCF before 2025 as it pays obligations deferred through COVID.</li>
<li>​Lufthansa continues to appear highest risk in 2024 given as capacity restoration catches up with peers.</li>
</ul>


Following AF-KLM and IAG results we refresh our forecasts, and our detailed quarterly bridge analysis in 2024 suggests each can grow earnings this year.
IAG clearly differentiates itself from AF-KLM with strong FCF generation while AF-KLM is unlikely to generate positive FCF before 2025 as it pays obligations deferred through COVID.
​Lufthansa continues to appear highest risk in 2024 given as capacity restoration catches up with peers.


European Airlines – FCF the Key Differentiator Between AF-KLM and IAG

<ul>
<li>We are most ahead of consensus for IAG in 2024, and recognising Lufthansa's highest-in-group double-digit capacity growth rate in 2024 may render its earnings most difficult to forecast/vulnerable to disappointment.</li>
<li>For AF-KLM 2024 seems a crucial year to demonstrate it can grow earnings in more challenging conditions if it is to increase confidence it can reach near-€4bn EBIT by 2028.</li>
<li>Delta reports 2023 results today, and its outlook commentary will be important to frame 1Q24 prospects on the Transatlantic, which should encourage that 2024 will prove resilient.</li>
</ul>


We are most ahead of consensus for IAG in 2024, and recognising Lufthansa's highest-in-group double-digit capacity growth rate in 2024 may render its earnings most difficult to forecast/vulnerable to disappointment.
For AF-KLM 2024 seems a crucial year to demonstrate it can grow earnings in more challenging conditions if it is to increase confidence it can reach near-€4bn EBIT by 2028.
Delta reports 2023 results today, and its outlook commentary will be important to frame 1Q24 prospects on the Transatlantic, which should encourage that 2024 will prove resilient.


European Airlines - Bridging Quarterly 2024 Prospects Encourages with Fuel Tailwinds/Tight Supply

<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>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

United Kingdom

International Consolidated Airlines Group S.A. provides transportation services. The Company offers international and domestic air passenger and cargo transportation services. International Consolidated Airlines Group serves customers worldwide.

International Consolidated Airlines Group (IAG LN)

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International Consolidated Airlines Group (IAG LN)

European Airlines – Bridging Flag Carrier 1Q24 and 2024 Prospects

Deep dive on quarterly earnings prospects for the European flag carriers through 2024 illustrates 1Q difficult and forward commentary crucial to...

Neil Glynn

European Airlines – FCF the Key Differentiator Between AF-KLM and IAG

Deep dive on the quarterly earnings outlook for AF-KLM and IAG which illustrates the scope for each to grow EBITDAR in 2024 despite persistent...

Neil Glynn

European Airlines - Bridging Quarterly 2024 Prospects Encourages with Fuel Tailwinds/Tight Supply

Detailed analysis of 2024 prospects for the European network carriers suggests margin resilience given fuel tailwinds and tight supply. Quarterly...

Neil Glynn

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

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

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