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>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>Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.</li>
<li>Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.</li>
<li>Ryanair is comfortably most insulated given margin and balance sheet strength.</li>
</ul>


Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
Ryanair is comfortably most insulated given margin and balance sheet strength.


European Airlines - Assessing Fuel Price Risk to Earnings

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

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.

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International Consolidated Air (IAG SM)

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

European Airlines - Assessing Fuel Price Risk to Earnings

Detailed historical and forward looking analysis on the European airline sector's ability to manage fuel price headwinds/volatility.

Neil Glynn

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

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