Cookie Consent

This site uses cookies for functionality. To see our cookie policy click here.

If you continue to use this site we will assume that you are happy with this.

European majors:
Triple Peaks — March 2018

Cloud Image

Nearly ten years on from the peak of the last cycle, the major European network carriers are finally producing healthy returns. In the depths of the downturn following the global financial crisis, each of the top three groups put in place plans to return to a sustainable level of profitability by 2015. Things don’t always work to plan, but finally in 2017 IAG delivered a return on invested capital of over 16% (above its 15% through-the-cycle target) and the Lufthansa Group its highest ever result with an operating profit of €3bn and return on capital of 11.6%. Even Air France-KLM managed to achieve an operating profit of €1.5bn, a margin of 5.8% and a nominal return on capital of 11%. What now?

In the last few weeks each of the European major network groups — IAG, Lufthansa Group and Air France-KLM — published results for 2017 showing a strong improvement in returns. If there is a common thread it is: the three major players' mainline carriers — British Airways, Air France and Lufthansa — maintained what is referred to as capacity discipline, while pushing growth to lower cost subsidiaries; unit revenues rose faster than unit costs across each of their subsidiary airlines; margins improved; there was a long anticipated recovery in cargo operations; and all have embraced the latest industry fad of starting long haul low cost operations.


This is premium content, only available to subscribers. To access Login or contact