Tuesday, February 17, 2009

Airline as a reflection of the health of the economy - Thoughts from the Association of European Airlines.

Airline traffic is a pretty good reflection of what is going on in the real economy. It reflects personal and corporate confidence levels and points to where companies are trying to constrain costs. The Association of European Airlines reported a 21.4% fall on y-o-y cargo traffic in December 2008 and had the following comment for last year : " We have seen figures as weak as these on only 3 occasions in the last 25 years..We have no reason to suppose that we are at,or even approaching the bottom of the cycle...19 of our member airlines reduced seat capacity in 12/08, 8 of them by more than 10% - yet overall the traffic decline was still greater than the capacity cutbacks".

Ryanair's Chairman has said that he is still in negotiations with Boeing and Airbus for a $7bn, 200 aircraft order. However, he is happy to wait 'until their order books collapse' in order to negotiate a better deal.

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