Analysis Reports
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On 5-Jun-2025 Wizz Air Group reported a 42% reduction in its net profit, to EUR213.9 million, in FY2025. Revenue grew by only 3.8, and the airline's operating margin fell to 3.2% from 8.6%.
The major cause of its weaker profits was the grounding of close to 20% of its fleet due to problems with aircraft powered by Pratt & Whitney's GTF engines. Although Wizz Air is still very much an ultra-low-cost airline (alongside Ryanair and Pegasus - that is, one of only three in Europe), the groundings have slowed its capacity growth and caused a spike in unit cost.
This report is CAPA - Centre for Aviation's analysis of Wizz Air's strengths, weaknesses, opportunities and threats.
US airport privatisation: Can airports in the US be assessed by their ownership criteria?
In the US, and as is well recognised now, the original Airport Privatisation Pilot Programme produced no discernible result - with only one small airport leased, and that quickly returned to public sector control.
Until 2013 that is, when Puerto Rico's main airport - one in which "changing a light bulb required four workers, sometimes five if there was a light bulb available" - was leased to a consortium, one that is now 100% foreign-owned. It is now unrecognisable from what it then was; it can be considered a success story and an exemplar.
That should send a clear message to government, but despite an easing of leasing conditions in 2018, there has been no further take-up. Although there has been a considerable increase in public-private co-operation for construction projects.
Other airports are coming under scrutiny, including Honolulu, the premier gateway and hub in Hawaii. Honolulu is an airport that regularly receives visitors from Asia Pacific countries, where high standards of infrastructure and service are in evidence, often at fully, or partly, privatised airports.
Also Newark Liberty, one that may enter into public-private agreements for new and refurbished terminals.
But not all the better US airports are privatised - they cannot be, because there is only one of them.
Intriguingly though, one of those better examples is Ontario International in California, which has come on in leaps and bounds since 2016. That was the year that it was divorced from Los Angeles World Airports, and came within the purview of municipal authorities that take a corporatised approach to running it.
In the meantime, the US awaits a specific set of new airport policies from the president, but they firmly remain at the back of a very long 'to do' list.
A couple of years ago Ireland's proactive daa International was set to operate a new government-built terminal building at Beirut Airport - but it suddenly fell through when the construction project collapsed.
It was a miracle that daa, or anyone else from the west, was there at all. Lebanon's problems are many, and they span four decades, including a bloody 15-year civil war, the present for finally extracting itself from that being a virtual takeover by the political and paramilitary group: Hezbollah.
With that group being decimated in the past six months, the government is turning its attention to long-abandoned projects, one of them being a new commercial airport to be built out of a military airfield in the north of the country. Lebanon only has one of them - in Beirut.
A 2012 report that a previous government commissioned wrote off the prospect as risible, but the Rene Mouawad Airport already had the hallmarks of a low-cost facility, something that would only be recognised by those conversant with the concept.
Now the government is revisiting the notion, and a 'master plan' will be revealed shortly. It would probably build it itself, just as the Beirut terminal would have been, but is already dangling the prospect of private investment into it.
The question is: who in his right mind would commit to such a project? Quite apart from Lebanon's lingering issues the 'new' airport is only 5km from the Syrian border.
Eurowings is introducing a new premium business seat - its 'Premium BIZ' seat - on its A320neo service between Berlin and Dubai.
The seat will be bookable from Aug-2025 and flown from Nov-2025. Eurowings also plans to introduce the concept on other longer medium haul routes in the autumn of 2025.
Notably, the Lufthansa low-cost subsidiary is trialling the new seat before any other group airline, none of which currently have any kind of premium seats on smaller narrowbodies.
Eurowings is more cost-efficient than other Lufthansa Group airlines. However, its unit cost does not qualify as 'low-cost' by comparison with other European LCCs.
The launch of a new premium-style product on Eurowings suggests that Lufthansa is keeping its options open on the use of its 'value airline' beyond the value segment.
As US airlines monitor close-in bookings, South American airlines cite solid near-term trends
Airlines based in South America aren't seeing the same level of pressure on demand as their US counterparts, but are keeping a cautious eye on forward bookings as global macroeconomic dynamics continue to cast clouds of uncertainty on the aviation sector.
But even as South American airlines feel reasonably positive about near-term prospects, visibility for later in the year remains murky as tariff whiplash continues, and those airlines aren't offering insights for later into 2025.
World airline outlook: IATA trims profit forecast. Tariffs bite; returns stay below cost of capital
On 2-Jun-2024 International Air Transport Association (IATA) trimmed its forecast of airline industry profit in 2025. The dramatic hike in US import tariffs has led to weaker global economic growth forecasts and lower expected demand for both passenger and cargo air travel.
IATA notes that the previous, more robust, economic outlook "has been thwarted by US trade policy that brings protectionism to a level not seen in decades".
However, the lower revenue outlook is very nearly matched by a lower forecast of costs (not least because of lower oil prices, themselves a result of the weaker economic backdrop).
The overall impact is that IATA expects a net profit forecast of USD36.0 billion, which is only slightly below its previous forecast of USD36.6 billion.
However, this continues to translate into a return on capital that is below the cost of capital. Moreover, the gap is widening.
As CAPA - Centre for Aviation has frequently argued, this shortfall to the cost of capital is evidence of an industry in need of further consolidation.
Despite filing for Chapter 11, Azul's has introduced air travel to millions of Brazilians
It's fair to conclude that Azul tried extremely hard to avoid Chapter 11 bankruptcy protection. But despite two major out-of-court restructurings of its balance sheet over the course of the last two years, Azul now has encountered the same fate as LATAM and GOL.
Unlike some airlines elsewhere around the globe that have recently sought Chapter 11, Azul doesn't have a flawed business model. Using a diversified fleet, the airline has introduced air travel to millions of Brazilians by opening up new markets unavailable to its competitors.
Azul's decision to restructure, in some ways, reflects the inherent paradox of doing business in Brazil - opportunities abound, but challenges are just as abundant.
Next stage of Brazilian regional airports concession will be single auction per airport, not blocks
The Brazilian airport concession programme, the most reported of any by CAPA - Centre for Aviation, over 14 years, has progressed sometimes rapidly and sometimes staggered its way through seven tranches.
It seemed to have come to a natural conclusion with the São Paulo Congonhas deal, leaving only the two Rio de Janeiro airports to be sorted out - a first time concession and a reconcession that the new government decided should be in tandem.
But the government and the regulator, Anac, have got the bit between their teeth and earlier this year they introduced a programme, AmpliAR, which aimed to attract over USD800 million in private sector funding to rehabilitate what has since risen from 50 to over 100 small regional airports - some little more than grass strips in the jungle - and rapidly. The programme is about to commence, and should complete within a year.
The big question is: what sort of incentives are going to be offered to established investors, including foreign ones (most of the world's leading investors in the sector are already in Brazil) to make this offer attractive, which is a primary objective of the government?
And that challenge became more difficult recently, when it was revealed that instead of the habitual 'block' system, each airport will be tendered individually.
Singapore Airlines (SIA) is confident that it has the right foundations in place to allow it to weather the latest wave of industry challenges - and also to take advantage of the next phases of Asia Pacific growth.
SIA's operating results are coming under the same pressures as those of most other Asian airlines - with headwinds from supply chain issues, competition, tightening yields, and geopolitical uncertainty.
While its earnings remain strong, these factors have contributed to a dip in the airline's operating profitability.
SIA has proven to be one of the most robust and consistent performers in the Asia Pacific region over many years, which inspires more confidence in its fundamental strategy than with most of its neighbouring rivals.
In a recent results briefing, the airline outlined some of the network, financial, and business model elements that underpin its strategy.
Group capacity is still expanding, although the subsidiary Scoot's growth has flattened off, due to narrowbody groundings.
The continued recovery in the mainland China market is a welcome sign for SIA.
The International Air Transport Association (IATA) anticipates improved airline profitability for 2025 and resilience in the face of continued global economic and political shifts. However, its projections represent a fall in net profits on its previous released numbers, but margins are expected to increase.
In an update to its 2025 airline industry financial outlook, released at its AGM in New Delhi, India, IATA predicted industry net profits of USD36.0 billion, improved from the USD32.4 billion earned in 2024. This is slightly down on the previously projected USD36.6 billion (Dec-2024).
The projected net profit margin at 3.7% is an improvement from the 3.4% earned in 2024 and up 0.1pp on the previously projected 3.6%. Return on invested capital at 6.7%, is also an improvement from the 6.6% earned in 2024, but largely unchanged from previous projections.
Operating profits at USD66.0 billion, are also an improvement from an estimated USD61.9 billion in 2024, but down from the previously projected USD67.5 billion.
The standout projection though is that the industry will not exceed the anticipated USD1 trillion revenues, albeit will still hit record annual levels. Total revenues are projected to reach USD979 billion (+1.3% on 2024). Total expenses will hit USD913 billion (+1.0% on 2024, but below the previously projected USD940 billion).
Total traveller numbers will also reach a record high but will again miss a key milestone. An anticipated 4% rise over 2024 will bring annual passenger traffic to 4.99 billion for 2025, a revision from the 5.22 billion projection from the end of 2024.
Total air cargo volumes will follow the same trend reaching 69 million tonnes, up 0.6% on 2024, but below the previously projected 72.5 million tonnes.