The aviation industry continues to recover from pandemic-related declines, although overall losses have shrunk from $159 billion in 2021 to $69 billion last year. Partner Vik Krishnan and coauthors note that airlines in particular have lower and more volatile returns compared with other subsectors in the aviation value chain, such as fuel production and ground services. This is due in part to airlines’ high exposure to external shocks.
Image description:
A scatterplot chart shows the average ROIC for aviation industry value chain subsectors (y-axis) as well as the volatility of those returns as the ratio of standard deviation in ROIC to average ROIC (x-axis). Certain subsectors, like freight forwarders and fuel production, show high average returns and low volatility. All airline subsectors—such as North American airlines, low-cost airlines, European airlines, airlines overall, and network airlines—show low average returns and high volatility.
Source: Aviation value chain model; company reports; S&P Global; The Airline Analyst, Airfinance Journal.
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To read the article, see “Checking in on the aviation value chain’s recovery,” October 25, 2023.