Thomas Cook

20th June 2019

A Crash In Profits For The Airline Industry?

A string of profit warning from some of the world’s leading Airlines has seen big falls in share prices. Lufthansa plunged 11% on Monday morning after being the latest major Airline to issue a profit warning. 

With a chronic oversupply, rising fuel costs and an uncertain Global economic outlook, the Airline market is long overdue a period of consolidation. When Air Berlin folded in 2017, there was a prime opportunity to relieve some of the excess pressure in the market, but companies chose to continue chasing market share.   

The resulting, continued pressure on Airlines is now starting to show across the market, particularly in the European market.  Share prices at EasyJet, Wizz Air, Ryanair Holdings PLC, Air France KLM, and International Airlines Group have all fallen significantly this week.

However, Plimsoll, the leading provider of financial analysis, believes that long-term financial stability is a better measure of company performance than short-term, volatile share prices. Having assessed the financial stability and overall outlook of the 300 largest Airlines in the world, the Plimsoll Analysis shows:

  • Average margins in the market have been falling for 3 years
  • The number of Airlines Plimsoll has rated as Danger has risen to 129
  • 90 of the 350 companies are losing money
  • Budget airlines are making twice the profit of “Legacy Carriers”
  • Budget airlines are averaging a sales per employee figure much higher than the industry average 
  • 62 of the 350 carriers have seen sales decline in the latest year

Plimsoll provides a 5-year study on the financial health and performance of the world’s largest and most important Airlines. The Plimsoll Model, provided individually on each company, is the easiest way to understand and compare complex financial and company information in super quick time. Whether you are comparing financial health or looking for potential acquisition opportunities, the Plimsoll Analysis will help you to spot opportunities and eliminate risk.

To order the Plimsoll Analysis, just click here.