In this annual review we have condensed some of IBA’s ideas and thought leadership throughout 2015 into an easy-reference format:
- Widebody valuations – takeaways from our B777 investor day
- The secondary market – the acceleration of retirements and obsolescence
- Maintenance costs – managing a bigger slice of the costs cake
- Redeliveries – a summary of our whitepaper, with a closer look at engines
- A glance at the opening up of the Iranian market
It’s never dull in aviation and 2015 was no different
The continued low oil price which, for the short term at least looks set to remain below $50* a barrel, continues to assert its influence on the industry.
Cheap oil lowers costs and (provided fares are lowered as a result) strengthens demand which is reflected in the record profits and margins across the industry. Older, less efficient aircraft become more appealing in the short-term and operators are able to explore their route boundaries without starting a price war.
Fuel hedging policies continue to hurt those stuck in the past although many are not choosing to take advantage by lowering fares whilst demand remains so strong. In turn they are choosing to act more rationally which can be considered to be unusual behaviour in its own right… by buying out leases or paying down debt, rather than extending the already too-long backlogs.
In the US our American friends also benefited from the stronger dollar and the resulting 20%+ margins for airlines, a figure that we didn’t think we would see again.
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