Analysis Reports

Aegean Airlines Group reported its highest-ever revenue of EUR1.8 billion, and its second highest net profit of EUR129.9 million for 2024.

It is among the most profitable airline groups in Europe - in spite of challenges posed by the grounding of GTF-powered aircraft, a very seasonal Greek market, and strong low-cost competition.

Sitting in a market segment between LCCs and traditional legacy airlines, Greece's biggest airline group continues to prove itself.

This report considers Aegean Airlines Group's strengths, weaknesses, opportunities and threats.

It was only at the end of 2024 that CAPA - Centre for Aviation reported on a sudden flurry of activity in the airport sector M&A business involving Canadian pension funds, one of which is PSP Investments - the owner of Germany's AviAlliance.

AviAlliance itself had bought AGS Airports, three smaller facilities in the UK, each of which had found the going to be hard in the COVID pandemic years, and had failed to mark a serious turnaround in fortunes since. Even though each is confident of its future path, and has infrastructure plans in place accordingly.

Now, and in a rare example of an almost immediate on-sale, the US alternative asset management and financial services company Blackstone has taken a 22% stake in AGS Airports from AviAlliance/PSP, leaving the latter with a 78% share.

To PSP/AviAlliance this deal provides a welcome financial backstop, but it is harder to fathom Blackstone's motives. It already has part ownership in airports in France and Italy, including some with a cachet, like Rome and Nice.

It may be attracted to UK airports generally, because there has been considerable M&A activity in recent years, but that has been at much bigger airports like London Heathrow and Gatwick, and Edinburgh.

Moreover, at each of the three AGS airports there have been difficulties, and all have seen traffic diminish as a result. None of those difficulties will go away anytime soon, while decisions on North Sea oil and gas contracts (Aberdeen Airport) and on a third Heathrow runway (together with Edinburgh Airport's growing influence over Glasgow in Scotland) will continue to conspire against them.

Until now, CAPA - Centre for Aviation's quarterly analysis of the capacity outlook for European aviation airlines has focused on the recovery from the COVID-19 pandemic, expressing seat numbers as a percentage of the equivalent period of 2019.

However, with both capacity and traffic above 2019 levels for the past four quarters, analysis will now return to the more traditional metric of year-on-year growth.

Europe capacity growth is projected to slow from 6% in 1Q2025 to 4% in 2Q2025, but with faster growth in intercontinental than in markets intra-Europe.

Europe RPKs have been above 2019 levels since Jan-2024, and load factor is growing.

LCCs have recovered particularly strongly, and their seat share continues to increase in Europe.

Recent commentary from Europe's biggest airlines has mainly been positive on the outlook for summer 2025.

However, there are some notes of caution: air fare inflation has softened in the EU, and turned negative in the UK in recent months.

Moreover, global geopolitical uncertainties are growing.

Europe's island markets have a much higher propensity for air travel than other leading aviation markets in the region - in general, they also enjoy higher growth.

Crucial to this is that small island territories depend much more on air travel for connectivity with the rest of the world. In addition, they are often popular tourist destinations.

In the case of Iceland, it has also been successful at attracting trans Atlantic connecting traffic.

This report looks at the size and growth of seven small island markets in Europe. These comprise three nations (Cyprus, Iceland and Malta), three UK crown dependencies (Jersey, Guernsey and Isle of Man) and a self-governing region of Denmark (Faroe Islands).

Ryanair Group extended its lead as Europe's biggest airline group by passenger numbers in 2024.

Its 197 million passengers in the calendar year gave it a huge lead over second placed Lufthansa Group's 131 million. The gap of 66 million was more than the annual passenger count of all but the top six groups.

Ryanair carried 106 million more passengers than the next biggest low cost airline group: easyJet (also the number two individual airline brand). This gap was more than the annual passenger count of all but the top three groups.

Collectively, Europe's top 20 airline groups increased passenger numbers by 7.5% year-on-year in 2024, and were 4% above their 2019 traffic level.

The seven LCCs among the top-20 fared better, collectively carrying 19% more passengers than in 2019.

Canada has operated its unique 'not for profit' stakeholder board system, that is mainly run by the public sector to manage its airports, since the 1990s. It has its admirers and its detractors, both within and outside Canada.

One thing that system does not support, to the level it might, is the profit motive. But the airports have to turn a substantial profit on their operations to pay hefty ground rents to the government - which bases them on the revenues they work hard to generate.

A Catch-22 level conundrum.

Various types of privatisation models were examined by the government in 2017, but the procedure fizzled out. One of the peculiarities of Canada's economy is that its pension/superannuation funds for public sector workers can invest in foreign airports (and they do), but they aren't allowed to at home.

Now the government is preparing the ground to permit them to do that, through a Mar-2025 policy statement. Partial privatisation might help to relieve the burden of the ground rents, especially if the private sector investors can obtain up to 49% of an airport's equity (bearing in mind that there are no traded shares yet).

That would give the airports more money to invest in infrastructure, or pay off debt.

And the airlines are delighted, as they envisage lower charges to them - leading to lower fares to passengers who won't have to jump ship to the Unites States to find a cheap flight.

It seems as if everyone is a winner, but these major changes in long-established philosophies are never easily accomplished, and it is worth bearing in mind that some elements of the existing model have value.

Korean Air's sweeping brand update is about more than just about aesthetics - it also reflects the airline's shift to a more global mindset, enabled by the expansion that will occur after it absorbs Asiana Airlines.

The new branding, which involves significant changes to its logos and aircraft livery, is the most visible aspect of a broader revision of the airline's corporate identity. This has been prompted by Korean Air's acquisition of Asiana, which was finalised in Dec-2024 after a multi-year campaign to gain regulatory approvals in several countries.

Asiana will be a Korean Air subsidiary until the integration is completed in Jan-2027, and much work will be needed in the meantime to ensure the merger of two large airlines goes smoothly.

The merger will mean fleet and network growth for Korean Air, and the new corporate identity aligns with its ambition to play a larger role in connecting different markets across the world.

As one executive puts it, Korean Air will be not just a South Korean flag carrier, but a major global airline that is based in Korea.

Brazil's CCR, an operator of toll roads with other interests (such as airports) was, as recently as two years ago, seeking to grow its portfolio of airports under concession, the majority of which are in Brazil.

But now it is looking to offload some, or even all, of those concessions, wholly or partially, along with investments in the urban mobility business, as it seeks to relieve debt and to expand further in the profitable toll road sector.

At the same time, CCR is not averse to locating other airport investment opportunities in Latin America or even further afield.

Its aversion to its current portfolio and its prospects seems to be driven by the acknowledgement that its airport market is fragmented, and requires consolidation, and that even as a recognised Brazilian company of some gravitas it does not have a major gateway airport in any of the big three Brazilian city-regions to boast.

Lining up to acquire those assets, wholly or partly, are companies like Flughafen Zürich and VINCI, which both have existing Brazilian airport assets; and indeed, the former is already the joint operator of Belo Horizonte Confins (Tancredo Neves) Airport, within the BH Airport consortium with CCR.

The interesting thing here is whether another operator will enter the fray, and even more so, if any of the consortiums that formed to bid for smaller groups of airports in the latter stages of the formal concession tranches between 2012 and 2024 will step up to the plate to confront and take on the industry's big players.

The North Atlantic has recovered from the COVID-19 pandemic faster than the total market for aviation to/from/within Europe. Capacity in the premium economy cabin has bounced back the strongest, whereas first class capacity on the North Atlantic has shrunk since 2019.

Capacity growth between Europe and North America is set to slow from 5.9% in 2024 to 2.4% in the first eight months of 2025. Premium economy is scheduled to outpace this, but is projected to slow from 8.0% in 2024 to 4.3%.

Europe's big three legacy airline groups - Lufthansa Group, IAG and Air France-KLM - currently see a positive outlook on the North Atlantic, supported by their immunised JVs and the strength of the premium cabins. Premium leisure travellers have offset the impact of a more sluggish recovery in business travel.

The North Atlantic should remain a driver of profits for the big three in 2025, but macroeconomic and geopolitical uncertainties should not be ignored.

Among Europe's large aviation markets Türkiye has enjoyed the strongest recovery from the COVID-19 pandemic: its seat capacity in 2024 was 20% above its 2019 level, whereas capacity in Europe as a whole was flat on 2019.

The nation's two largest operators, the flag carrier Turkish Airlines and the ultra-low cost airline Pegasus Airlines, have also performed well. They occupy different market segments, and appear able to operate in a kind of competitive equilibrium.

Nevertheless, Pegasus has recovered capacity and traffic more rapidly, and with a higher load factor and superior operating margins.