Investing in airlines has always been a hazardous game, given the industry’s notoriously poor record of capital allocation, cyclicality and exposure to geopolitics, terrorism and the oil price. The former contributing towards the eye-watering bankruptcies at Sir Freddie Laker’s SkyTrain and PanAm back in the 1980/90s, in addition to US, Northwest and American airlines post 2000. Worse still, carriers are today right in the cross-hairs when things go wrong, as demonstrated by British Airways’ public relations fiasco at Heathrow and Gatwick last weekend. Nonetheless, real improvements are being made, with stronger management forcing through capital discipline and more flexible cost structures, alongside greater demand from emerging market tourists, who are increasingly opting to travel abroad.
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Major turnaround taking shape
- Published:
01 Jun 2017 -
Author:
Paul Hill -
Pages:
7
Investing in airlines has always been a hazardous game, given the industry’s notoriously poor record of capital allocation, cyclicality and exposure to geopolitics, terrorism and the oil price. The former contributing towards the eye-watering bankruptcies at Sir Freddie Laker’s SkyTrain and PanAm back in the 1980/90s, in addition to US, Northwest and American airlines post 2000. Worse still, carriers are today right in the cross-hairs when things go wrong, as demonstrated by British Airways’ public relations fiasco at Heathrow and Gatwick last weekend. Nonetheless, real improvements are being made, with stronger management forcing through capital discipline and more flexible cost structures, alongside greater demand from emerging market tourists, who are increasingly opting to travel abroad.