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>Wizz Air's FY24 contained multiple distortions; we disaggregate cash flow dynamics to show an improving picture.</li>
<li>Capacity restraint has been enforced by engine issues, not zero growth in FY25 is producing high single-digit % unit revenue gains.</li>
<li>We see an opportunity for Wizz Air to rise above distortion to earnings from engine issues and compensation by providing incremental cash flow clarity.</li>
</ul>


Wizz Air's FY24 contained multiple distortions; we disaggregate cash flow dynamics to show an improving picture.
Capacity restraint has been enforced by engine issues, not zero growth in FY25 is producing high single-digit % unit revenue gains.
We see an opportunity for Wizz Air to rise above distortion to earnings from engine issues and compensation by providing incremental cash flow clarity.


Wizz Air - Opportunity to Shift Focus from P&L Distortion to Cash Flow Clarity

<ul>
<li>Ryanair issued a stark warning on summer pricing today with 1Q25 results and we cut our FY25 net income 31% accordingly.</li>
<li>Our forecasts represent a re-set of unitary economics to pre-pandemic levels and it is difficult to plot improvement unless consolidation benefits or winter surgery help FY26.</li>
<li>Ryanair's cost advantage has widened markedly against peers, justifying a strategy of continued market share focus as competitors face greater challenges.</li>
</ul>


Ryanair issued a stark warning on summer pricing today with 1Q25 results and we cut our FY25 net income 31% accordingly.
Our forecasts represent a re-set of unitary economics to pre-pandemic levels and it is difficult to plot improvement unless consolidation benefits or winter surgery help FY26.
Ryanair's cost advantage has widened markedly against peers, justifying a strategy of continued market share focus as competitors face greater challenges.


Ryanair – FY25 Weakness Suggests a “normalization” and Prompts Structural Industry Questions

<ul>
<li>Wizz Air held guidance for FY24 to March 2024, or net income of €350m-€400m, but only due to compensation from Pratt &amp; Whitney.</li>
<li>With no capacity growth in FY25 to March 2025, and costs apparently under control, Wizz Air should be able to drive significant earnings improvements.</li>
<li>Wizz Air seems set to receive over €200m in P&amp;W compensation for aircraft groundings in 4Q24 to March; read across for other airlines operating grounded GTFs.</li>
</ul>


Wizz Air held guidance for FY24 to March 2024, or net income of €350m-€400m, but only due to compensation from Pratt &amp; Whitney.
With no capacity growth in FY25 to March 2025, and costs apparently under control, Wizz Air should be able to drive significant earnings improvements.
Wizz Air seems set to receive over €200m in P&amp;W compensation for aircraft groundings in 4Q24 to March; read across for other airlines operating grounded GTFs.


Wizz Air - Distortion Continues but Conditions Favourable to Pass Key Summer Test

<ul>
<li>Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.</li>
<li>Concerns over pricing continue to increase in Europe, following Lufthansa's profit warning last week.</li>
<li>We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.</li>
</ul>


Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.
Concerns over pricing continue to increase in Europe, following Lufthansa's profit warning last week.
We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.


Ryanair - Pricing Appears to Be Softening; Re-Setting Profitability Expectations

<ul>
<li>Summer pricing data suggests growth yoy for European short haul carriers.</li>
<li>This prompts us to raise our easyJet PBT forecast 11% to £676m for FY24.</li>
<li>We continue to see underperforming Wizz Air as the carrier with greatest opportunity to improve perception towards it by executing well in summer 2024.</li>
</ul>


Summer pricing data suggests growth yoy for European short haul carriers.
This prompts us to raise our easyJet PBT forecast 11% to £676m for FY24.
We continue to see underperforming Wizz Air as the carrier with greatest opportunity to improve perception towards it by executing well in summer 2024.


European Airlines – Increasing Confidence in LCC Summer Pricing and Profitability

Switzerland

The Jungfraubahn Holding AG founded in 1994, was the result of a merger between two primary railways, the Jungfraubahn and the Wengernalpbahn. These railways provide transportation for vacationers to the mountains of the Jungfrau region of the Swiss alps. The Group also holds participations in smaller railways and in related businesses such as parking facilities and restaurants.

Burckhardt Compression Holding AG manufactures reciprocating compressors.  The Company produces compressors for oil refining, the chemical and petrochemical industries, industrial gases, and gas transport and storage.

Daetwyler Holding AG manufactures rubber components and sealing solutions for the automotive, pharmaceutical and civil engineering industries. The company also distributes electronic, automation, engineering and IT components and accessories.

dormakaba Holding AG provides mechanical and electronic security systems. The Company offers door closer systems, electronic access, master key, safe locks, and movable walls. dormakaba Holding markets its products worldwide.

Interroll Holding AG, through its subsidiaries, produces components and systems for the storage and distribution of goods.  The Company's products include conveyor rollers, bulk storage, dynamic storage, and automation equipment. Interroll's products provide solutions for storage, distribution, and commissioning of goods.

IWG PLC operates as a holding company. The company owns and provides office space.

Bossard Holding AG supplies fastening devices, industrial adhesives, and tools. The Company offers its customers engineering assistance in solving fastening problems.  Bossard markets its products in Europe, the United States, and Asia.

Bucher Industries AG manufactures food processing machinery, vehicles, and hydraulic components. The Company produces fruit and vegetable juice processing machinery, fodder harvesters, plows, seed drills, feed mixers, plant sprayers, spreaders, street sweepers, and snow blowers. Bucher operates worldwide.

Kardex AG provides products and services in the logistics of dynamic storage and retrieval systems, static storage systems and automated warehouse and materials handling systems. The company offers its products and services in Euro countries, other European countries, the Americas, Asia, and the Pacific Rim. Kardex AG is headquartered in Zurich, Switzerland.

OC Oerlikon Corporation AG manufactures industrial equipment. The Company produces vacuum pumps, equipment to supply PVD coatings for tools and precision components, man-made textile machines, and transmission driveline equipment.

SkyWest, Inc. operates regional airlines that offer scheduled passenger service to destinations in the United States, Canada, Mexico, and the Caribbean.

Hanjin KAL Corporation is a holding company. The Company, through its subsidiaries, engages in airline, hotel, and travel related services. Hanjin also invests in real estates.

Air France-KLM provides air transportation services. The Company operates airlines and offers travel booking, catering, freight transportation, aircraft maintenance, and pilot training services. Air France-KLM serves customers worldwide.

Vietjet Aviation Joint Stock Company provides air transportation services. The Company offers flight and booking information, in-flight, cargo, and baggage services. Vietjet Aviation operates flights to various destinations in Southeast Asia.

PAL Holdings, Inc., through its subsidiaries, engages in the air transportation of passengers and cargo in the Philippines and internationally. As of December 31, 2014, its route network covered 32 points in the Philippines and 35 international destinations. The company was formerly known as Baguio Gold Holdings Corporation and changed its name to PAL Holdings, Inc. in January 2007. The company was incorporated in 1930 and is based in Makati, the Philippines. PAL Holdings, Inc. is a subsidiary of Trustmark Holdings Corporation.

Vietnam Airlines JSC operates as an airline. The Company provides air transportation services for passengers, baggage, and cargos on domestic and international routes. Vietnam Airlines serves customers worldwide.

Pegasus Hava Tasimaciligi AS offers scheduled air passenger transportation services. The Company offers air transport services within Turkey and between Turkey and other European destinations.

Juneyao Airlines Co. Ltd. supplies air transportation services. The Company provides domestic and international routes for passengers and cargoes. Juneyao Airlines also offers ticket home delivery and electronic ticketing services.

Air France-KLM offers air transportation services.  The Company operates airlines and offers travel booking, catering, freight transportation, aircraft maintenance, and pilot training services.

JetBlue Airways Corporation provides nonstop passenger flight service through its Airbus A320 aircraft.  The Company's airline is based in New York's John F. Kennedy Airport and currently flies to various destinations in the United States.

Wizz Air Holdings Plc provides passenger and cargo air transportation services. The Company offers flight and connection programs in Central and Eastern Europe.

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Wizz Air Holdings (WIZZ LN)

Wizz Air - Opportunity to Shift Focus from P&L Distortion to Cash Flow Clarity

A deep dive into the complicated dynamics of Wizz Air's cash flow generation as it digests engine issues, compensation, and aircraft sale and...

Neil Glynn

Ryanair – FY25 Weakness Suggests a “normalization” and Prompts Structural Industry Questions

We publish detailed analysis on Ryanair's pessimistic outlook, highlighting that FY25's performance simply reflects a normalization, and...

Neil Glynn

Wizz Air - Distortion Continues but Conditions Favourable to Pass Key Summer Test

Deep dive on true underlying earnings of Wizz Air. Insight into GTF compensation from Pratt & Whitney applicable to impacted airlines

Neil Glynn

Ryanair - Pricing Appears to Be Softening; Re-Setting Profitability Expectations

Reflection of latest fare data in our Ryanair forecasts, with market pricing apparently softening further from June. We cut FY25 net income by 9%...

Neil Glynn

European Airlines – Increasing Confidence in LCC Summer Pricing and Profitability

Deep dive on European low cost carrier fare developments into summer 2024 and ramifications for profitability development via detailed earnings...

Neil Glynn

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