Analysis Reports

LATAM Airlines Group's impressive second quarter performance was against a backdrop of significant macroeconomic uncertainty, and occurred in what is typically a weak seasonal period for the company.

Some of the momentum is driven by an increase in passengers opting for premium products, and there is less seasonality among that customer base. LATAM also has one of the most diverse networks across Latin America, and beyond, that provides a buffer against seasonality.

It's not clear whether a permanent shift is under way from historical second quarter trends, but LATAM appears to be laying the groundwork to withstand more challenging periods of the year.

There was a time, long, long ago, when investing in airports was all the rage, largely driven by the advent of the 'low-cost' airport' (where 'low-cost airlines' operated), conversions of military facilities into commercial ones, and the advent of the hub-and-spoke system, which ultimately conquered the world after emerging out of US deregulation in 1978 and thereby attracting big league investors like investment funds, private equity and sovereign wealth funds.

But they started to lose their popularity among investors from around the mid-2010s, as an examination of Earnings Multiples in sales transactions (explanation in the text) shows.

There was not a great deal of activity during the COVID-19 pandemic - indeed, many transactions were postponed or put on the forever back burner.

There has been a slight resurgence since, and it has been most notable in the last six months or so, especially in the UK and Australia. But it is exclusively on-sales of equity in freehold property or concessions, rather than new privatisations.

This report looks at three things: overall valuations of sales in multiple sectors; valuations of airports from 2000 to 2018; and more recent valuations.

Its conclusion is that the sector remains entangled in the general malaise that has beset infrastructure as a whole, as well as economic circumstances that vary wildly across continents. And that although it is performing adequately against other sectors (including, as always, the airlines), no big leap in earnings multiples should be anticipated in whatever transactions might emerge in the remainder of 2025.

The halcyon days are over.

Aer Lingus has applied to the US Department of Transportation for authorisation to carry the QR code of its codeshare partner Qatar Airways' on its trans-Atlantic flights. Under the existing codeshare agreement between the two airlines, Aer Lingus only displays the QR code on a number of short/medium haul routes.

The Doha-based superconnector also codeshares with other IAG airlines and has a revenue-sharing agreement with British Airways, but Iberia is the only IAG operator currently carrying the QR code to the US.

The extension of the Aer Lingus codeshare will further strengthen its partnership with IAG. This not only involves close commercial co-operation, but also includes Qatar Airways' 25% equity stake in the European group.

A decade after Qatar Airways took its initial 10% stake, the shareholding is not strictly necessary to generate the benefits of the commercial partnerships.

Nevertheless, it continues to signal a serious and long term commitment.

The CAPA Airline Leader Summit Asia Pacific 2025 in Cairns featured a stellar lineup of high-level speakers and panellists covering a wide range of critical industry topics. These highlights cover a selection of the key insights from the packed agenda of in-depth interviews, keynote presentations and expert panel discussions.

For full coverage of the CAPA Airline Leader Summit Australia Pacific and more, visit the CAPA - Centre for Aviation website or add the CAPA Events category to your custom news Alerts.

Norse Atlantic Airways group is scheduled to operate 11 routes in winter 2025/26, which is the same number as during the past winter.

However, six of these routes will be to destinations in Asia Pacific - specifically Thailand - compared with just one in the past winter (Oslo-Bangkok). It will operate four routes to the US and one to Africa (Gatwick-Cape Town).

The parent Norse Atlantic Airways is launching three new services to Thailand in the coming winter 2025/2026: Phuket from Oslo and Stockholm, and Bangkok from Stockholm.

Norse Atlantic UK will launch two new Thailand routes: Bangkok from London Gatwick and Manchester. Manchester-Bangkok will be the first-ever direct connection between the two cities, which it describes as "the region's largest underserved long haul market".

This rebalancing of its own network, while the low cost long haul airline is also undergoing a strategic tilt towards third-party flying, is aimed at smoothing out seasonal demand patterns.

Norse Atlantic's new routes certainly offer potential, but competitor response will be the real test.

The financial struggles of some regional airlines in New Zealand have spurred a new round of debate about the need for government support for this sector, while the Australian government is also considering how much backing to give the country's largest independent regional airline.

Such questions are common in many countries. Regional aviation is often a hot-button political issue, as governments and opposition parties know that maintaining air services is one of the key concerns for voters in regional communities.

However, due to their smaller scale and thinner revenue streams, regional airlines have been hit particularly hard by the supply chain problems and resulting cost increases that are plaguing the airline industry.

Calls for more government support for regional airlines have been increasing in recent years, and two developments have magnified the issue further.

In New Zealand, the regional airline Sounds Air has just announced that it will sell five Pilatus PC-12 turboprops that comprise more than half its fleet, and it will also cut the routes they served.

And in Australia, the government has already taken steps to shore up Rex while it is in administration, and further support is likely to be needed.

For many years now the Maldives islands, lying to the southwest of India and Sri Lanka, have been a huge tourist attraction to those with pockets deep enough to explore them.

Tourism has grown from a cross section of countries and economic systems, including China and Russia, as well as traditional European markets, to what was a British colony until 1965.

Even so, many parts of the world remain unconnected, at least directly, to this tourist idyll.

That should start to change as what has been a decade long construction period for a new runway and terminal building valued at USD1 billion reaches fruition, that design and construction having been undertaken largely by Saudi and Chinese companies. The new terminal opened on 26-Jul-2025.

And it is to those countries that the government will now be looking to provide the additional passengers that will pay for all this, rather than older markets in Europe.

The infrastructure appears to be in place to handle that additional traffic in a variety of accommodation, but hanging over the Maldives is its own Sword of Damocles in the form of rising sea levels, which haven't yet done the harm they were expected to, but which still could.

Much of the onus on future tourist growth will fall on the tourists themselves and on what risks they are prepared to take. There is no high ground in the Maldives on which to take shelter from, say, a tsunami.

Unless you count 8 feet as high!

Alaska Air Group marked a milestone in 2Q2025 when Hawaiian Airlines posted its first profitable quarter since 2019. It bodes well for the early days of the merger integration between the two companies, as they continue to redeploy Hawaiian's widebodies to maximise their combined assets.

There's also upside for cargo synergies that are starting to take hold.

Obviously a lot of work has yet to be completed, and the overall industry backdrop, while stable, is not entirely predictable.

But for now, positive trends continue to stem from the combination, showing Alaska's calculus and timing for acquiring Hawaiian remains thoughtfully constructed.

This report presents CAPA - Centre for Aviation's annual operating margin ranking for 16 of Europe's leading airline groups for 2024.

Pegasus Airlines, Türkiye's ultra-low cost airline, topped the ranking for the third year running, the best of four groups with a double digit operating margin (down from six groups in 2023). SAS again reported the lowest margin, one of two with an operating loss (whereas it had the only negative result in 2023).

The majority of the 16 groups (12 of them) had lower margins in 2024 than in 2023. However, on the whole, they outperformed other European airlines: 10 of them beat IATA's estimate of the average European airline margin in 2024.

The current expectation among forecasters is that European margins will improve a little in 2025 versus 2024, although the factors driving profits are complex - as ever - and a decline in margins is also a possibility.

Either way, Europe's largest airline groups are likely to continue to fare better than the sector as a whole.

Within the past week or so two key events took place involving London Heathrow Airport.

Firstly, it announced a GBP10 billion investment programme over the next four years - one that will be partly paid for by a hike in landing and other charges.

Secondly, the now majority shareholder Ardian announced the acquisition of another slug of the equity, taking it to almost 33% and putting it as firmly in charge, as was Ferrovial when Heathrow was privatised and stock market delisted in 2006.

Incidentally, that Ardian transaction also kisses goodbye to Ferrovial, to the Canadian pension fund CDPQ (which was also a 'founder investor'), and to the British Universities Superannuation Scheme fund.

But possibly the most interesting comment came from Virgin Atlantic, which complained vociferously - and not for the first time - about Heathrow's expense and 'monopoly power'.

One way of countering that power would be by having another national level hub airport in the UK; it isn't as if comparable countries elsewhere in Europe don't do that.

Successive British governments have tried, and manifestly failed, to establish an economic 'Northern Powerhouse' in the UK to switch attention away from the capital. Now the entire notion has gone to sleep, where it will probably stay for another 20 years.

Nominating a second UK global aviation hub and encouraging airlines to use it would be the best way of awakening a sleeping giant (the north and its engineering, textiles, and associated industries used to be the bread and butter in the UK; not in the south).

This report delves into the 'whys and wherefores' of such a decision, and nominates Manchester as the logical choice.