APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise

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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>For 1H24 we model EBITDAR of A$2,396m, ahead of Visible Alpha consensus of A$2,273m, which represents an EBITDAR/ASK 35% higher than 1H19.</li>
<li>1H24 will be important to help us better understand "normalised" unit cost levels, with inflation high to date, in part due to a 17% capacity deficit in 2H23.</li>
<li>Qantas has seen comparable inflation to the US majors but considerably higher profitability. This should enable it to invest in product, operational and customer service improvements while protecting margins.</li>
</ul>


For 1H24 we model EBITDAR of A$2,396m, ahead of Visible Alpha consensus of A$2,273m, which represents an EBITDAR/ASK 35% higher than 1H19.
1H24 will be important to help us better understand "normalised" unit cost levels, with inflation high to date, in part due to a 17% capacity deficit in 2H23.
Qantas has seen comparable inflation to the US majors but considerably higher profitability. This should enable it to invest in product, operational and customer service improvements while protecting margins.


Qantas - 1H24 to Provide Evidence of Margin Control

Qantas Airways

Qantas - 1H24 to Provide Evidence of Margin Control