Latin Mergers

Latin American Airlines Are the Post-Pandemic Future of the Industry

Pushing Back: Inside the Issue

Is the ultra-low-cost business model dead? Underwhelming earnings at Allegiant and Wizz Air lent firepower to the thesis, argued most prominently by United’s chief Scott Kirby. Both carriers beg to differ, blaming their summertime setbacks on operational woes and other temporary troubles that soon will fade.  

That’s one of many intriguing questions emerging from the third quarter earnings season. Has Singapore Airlines regained its status as one of the world’s most profitable airlines? Its latest results sure seem to point in that direction. Is there life left in the cargo boom? Korean Air, a leader in the space, speaks of much weaker freight demand, though that didn’t stop the Sultan of Seoul from besting all other airlines in the world in terms of third quarter operating margins. Throughout the pandemic, it’s been a profit champion thanks to cargo, though resurgent passenger demand is now carrying more weight — North American traffic is particularly strong right now, both to and from Korea as well as to Southeast Asia.    

Turkish Airlines is thriving post-pandemic, picking up where it left off and adding new longhaul routes. Will it form new partnerships in North America and Asia, as it says it wants to do? Air Canada had a good summer. Things were less good for India’s IndiGo. Japan’s top two airlines are regaining their footing. In Europe, meanwhile, TAP Air Portugal reported solid third quarter results as potential suitors circle. Air France-KLM seems to want it. So, reportedly, does IAG. The London Times says IAG might even want EasyJet. Italy’s ITA is apparently still in play. Consolidation talk, alas, is picking up steam across Europe.

The aircraft market gained lots of attention last week as Boeing presented to investors, and as the lessors AerCap and Air Lease Corp. reported third quarter results. One hot question: When will Boeing debut a successor to the 737? The company splashed cold water on the idea, citing insufficient engine technology advancement: “There is nothing proven on the propulsion side of the house, nothing that’s going to deliver that in this decade.” Back in the present, the aircraft market is tight, influenced by recovering demand and manufacturing bottlenecks.  

In other developments last week, Turkish is headed to Motown (that’s Detroit, for the musically illiterate). LCCs are grabbing a bigger slice of the dynamic Gulf market. U.S. airline results for the third quarter are all in (be sure to check the graphs below). Emirates says its planes are full. And public service advisory: Remove all children from the premises. Michael O’Leary will be speaking this week as Ryanair unveils its calendar third quarter results.

Airline Weekly Lounge Podcast

Air France-KLM wants TAP, but so does IAG. IAG also wants Air Europa, and maybe even EasyJet. And the Lufthansa Group is back in play for ITA. Plus, the outlook from Emirates. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.