We are delighted to share the key findings of the report below. Our data sources are The Airline Analyst and The Airline Analyst Financial Ratings.

Key Findings:  

In 2020/21, 47 airline groups generated aggregate positive EBITDAR of $20 billion, while 65 had a $44 billion EBITDAR loss. Most of the group of 47 shared a common trait: the strength and size of their cargo operations.

There were some significant regional differences:
• Partial recovery in the USA, Latin America and China;
• Strength in North East Asia;
• Surprising strength in the Middle East, with Air Arabia our top ranked airline for the second successive year;
• Weakness in Southeast Asia

Liquidity was the dominant factor in determining airline rankings but we should be careful not to overstate liquidity by comparing it with the latest revenues. It should be compared with ‘normal’ revenues as presented in Airline Top 100.

There were huge variances in the development of the EBITDAR break-even load factor. Some airlines show a clear pursuit of managing for cash, others less so.

Many airlines have reduced costs sufficiently or have had other sources of revenue, particularly cargo, so that their passenger break-even load factor has declined to the teens. Examples include Singapore Airlines and Cathay Pacific Airways.

Others with still significant cargo revenues have also achieved sizeable reductions in their break-even levels, this applies particularly to network carriers with relatively high yields. Examples include Air France-KLM down from 78% to 51%, Delta from 75% to 65%, Emirates from 56% to 38%, and Lufthansa from 78% to 60%.

At the other extreme are a number of LCCs with EBITDAR break-even load factors significantly above 100%. This is especially true in Southeast Asia.

Passenger yield development is fascinating, and clearly influenced by a reduction in average stage length due to the reduction in long-haul flights. Thirty-seven of our sample achieved increases in yields, some very significant, though offset by increases in unit costs. Twenty-eight had yield decreases; these airlines were concentrated in Latin and North America plus some LCCs in other regions.

The data shows that a number of airlines are hanging on by their fingernails in terms of liquidity and access to capital - 29 had liquidity of less than 5% of normalised revenues.

In aggregate, our sample of airlines experienced negative cash flow from operations of $72 billion and incurred $53 billion of investments in 2020-21. Loan repayments were an additional $113 billion outflow. This was funded by loan drawdowns of $241 billion, equity raised of $40 billion and proceeds of sales and leasebacks of $8 billion. Cash at the beginning of the period was $76 billion and increased to $155 billion by the end of the year.

But all of this came at the cost of balance sheets. Balance sheet debt (including operating lease liabilities under ASC 842/IFRS 16) increased from $392 billion to $596 billion and the debt/equity ratio more than doubled from 2.3x to 5.4x.

Fixed charge cover (FCC), which best illustrates the affordability of increased debt servicing, can only be assessed on an individual carrier basis. Clearly all 65 who had an EBITDAR loss had a negative FCC ratio.

Of the positive-EBITDAR airlines, 25 had FCC of greater than one, and 28 had a value between zero and one. Analysts and investors should watch this ratio closely as the industry continues its recovery.

The Airline Analyst monitors all of these key parameters on a daily basis, keeping the dataset fully up to date. It now offers delivery of data via API to get it into clients’ workflows and analysis fast and efficiently.

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