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

Ryanair Holdings plc provides low fare passenger airline services to destinations in Europe.

<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>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

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.

<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

Gol Linhas Aereas Intel-Adr / Equity Bottom-Up

Gol Linhas Aereas Inteligentes S.A. provides airline services for passengers and cargo.  The Company offers scheduled air transportation, cargo shipping, flight rescheduling, logistics, and onboard connectivity services. Gol Linhas Ae reas Inteligentes serves customers worldwide.

<ul>
<li>We cut our 2024 EBITDAR by 19% following a disappointing May revenue performance at GOL.</li>
<li>We also emphasise that plans to double 2023 EBITDAR by 2029 are highly ambitious in the context of Brazilian competitors LATAM and Azul margin progress since 2019.</li>
<li>GOL, undergoing Chapter 11, is the subject of much consolidation focus with an Azul codeshare and parent Abra discussing combining GOL with Azul. Leverage plans render effective consolidation more difficult. </li>
</ul>


We cut our 2024 EBITDAR by 19% following a disappointing May revenue performance at GOL.
We also emphasise that plans to double 2023 EBITDAR by 2029 are highly ambitious in the context of Brazilian competitors LATAM and Azul margin progress since 2019.
GOL, undergoing Chapter 11, is the subject of much consolidation focus with an Azul codeshare and parent Abra discussing combining GOL with Azul. Leverage plans render effective consolidation more difficult. 


GOL – Short-Term Challenges to Navigate Before Delivering on Complicated Long-Term Pitch

Equity Capital Markets

Avianca Holdings Sa / Equity Capital Markets

Avianca Holdings SA owns and operates airlines.  The Company offers scheduled air passenger transportation services within Colombia and to Central America, North America, South America, and Europe.

<ul>
<li>Avianca reached $1,200m EBITDAR in 2023, ahead of our forecast of $1,162m, already exceeding its 2024 target.</li>
<li>The company does not provide guidance on 2024 profitability but we publish our quarterly bridge analysis and map prospects versus LATAM Group guidance.</li>
<li>We forecast 10% yoy EBITDAR growth in 2024 on 20% capacity growth, which compares to our forecast of 15% EBITDAR growth at LATAM, which is growing less aggressively.</li>
</ul>


Avianca reached $1,200m EBITDAR in 2023, ahead of our forecast of $1,162m, already exceeding its 2024 target.
The company does not provide guidance on 2024 profitability but we publish our quarterly bridge analysis and map prospects versus LATAM Group guidance.
We forecast 10% yoy EBITDAR growth in 2024 on 20% capacity growth, which compares to our forecast of 15% EBITDAR growth at LATAM, which is growing less aggressively.


Avianca – Bridging 2024 Prospects with a Little Help from LATAM

Neil Glynn, FCA, CFA, is Founder and Managing Director of AIR Control Tower.

Neil has near to 20 years of aviation experience, based in Dublin and London, including the roles of Credit Officer at CIT Aerospace and head of global transport equity research at Credit Suisse. 

The quality of Neil’s industry-leading research and forecasting across the value chain is long-recognized by investors (long track record of top tier placing in Institutional investor European Transport analyst survey; ranked #3 in last survey in 2021) and corporates (regular management team/board workshops, conference presentations around the world). 

Neil has also led 10 initial public offering (IPO) processes, assessing the investment case of corporates seeking to attract new investors.