There is no doubt that the airline industry has been totally creamed over the last many years, and thus, there seems to be a rather timid approach towards expansion as 2010 by all sides of the sector including airliner manufacturers, airports, airlines, related travel services, and aircraft leasing, financing, and corporate bonds in the airline industry. Question is; what do those in the know really say about it all?
Consider if you will that in 2008 - 2009 the industry saw $28 billion in losses (2009 was 11 Billion of that). Indeed, air cargo got hit the hardest and was horrible, with a complete price collapse as air cargo was down over 14%, and now perhaps thus, has the biggest forward growth projection. In fact, things have been very good in the first quarter as air cargo returns. Unfortunately it was too late for JAL and a few others, but those who'd weathered the incessant turbulent weather are looking at clear skies ahead.
The largest airlines took on massive debt especially the legacy airlines during this Great Recession, a global economic catastrophe felt round the world and will be felt for years to come; a case in point perhaps is the reality that "First Class" is now deemed a dead product, also high-end hotel accommodations, concierge services, and green travel seem to be a dead end. Most of this will eventually come back and there are positive signs; finally, but no one is out of the woods yet, look at Oil Barrel prices near $90.
Many large airlines had their market cap or value, so low you could buy them for about $100 million, of course you'd have had to take on massive debt in the 10s or even 100s of billions. In 2010 traffic growth is expected at 4.5% but no one believes that they will be back to the norms of 2007 until maybe the fourth quarter of 2012. And that's a bummer for those who believe in the Mayan Calendar end of the world theory!
In 2010 is all about cash, as borrowing will be tougher. Many believe there is still too much capacity in the industry upwards of 20% still, and yet many airlines in Middle East and Asia are out buying new planes? The reality is things are not the same in all regions even though for the most part this is a very Global Industry. There have been massive global losses, and even as things return some airlines may not be able to hold on, so there will be some mergers and acquisitions, but fuel is still the big kicker oil could go either way, in 2010.
Management says it didn't fail in airlines, each of the major industry's problems have been brewing for a while, and they were exacerbated by the 2008 global economic crash. Labor issues are still huge challenge for the industry, just look at the recent high-profile strikes in Europe? Some airlines are actually doing quite well like Asian air, and were growing throughout the Global Great Recession, but they were far and few between. Asian Air showed profits the entire period, which is absolutely an Outlier in retrospect. Please consider all this.
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