The State of the Aviation Industry Post COVID-19

Naji Nehme, CFA, Chief Executive Officer and Chief Investment Officer at Petiole Asset Management AG, and Joe McConnell, Partner and Deputy Co-Chief Investment Officer at Castlelake, discuss the state of the aviation industry post COVID-19. Below are the highlights of the webinar:

Jun 22, 2023|Market Insights- 4 min

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  • Over the last 70 years, global air travel has grown consistently 1.5 times faster than GDP.

  • Aviation and airline profitability are volatile. But the supply and demand of their assets are steady and predictable.

  • The COVID-19 pandemic was the worst crisis ever experienced by the industry, with 90% of aircraft grounded within 30 days. Also, the Russia-Ukraine war resulted in the confiscation of over 500 aircraft. However, the industry has largely recovered.

  • In North America, summer travel is expected to exceed 2019 levels. In Europe, it is almost exceeding 2019 levels. In Asia, excluding China, it is also approaching 2019 levels. China lagged but is recovering rapidly.

  • Globally, aviation industry revenues have almost returned to 2019 levels.

  • Aircraft are in short supply, while airlines require more planes. The COVID-19 pandemic has caused numerous supply chain issues, and the industry is struggling to meet demand.

  • Castlelake believes that the shortage will be 4,500 aircraft through 2030.

  • Demand for aircraft will remain high, resulting in short supply and higher ticket prices.

  • During the pandemic, airlines worldwide needed to restructure their business.

  • Aviation is critical to driving global GDP.

  • Castlelake relocated 29 aircraft from Indonesia to the U.S. during the pandemic, as demand recovered faster in the U.S. and Europe compared to Southeast Asia. This helped protect their investors' capital.

  • Castlelake ensures asset-liability matching through term funding and interest rate hedging.

  • Innovation focuses on providing a product that people desperately want, while minimizing carbon emissions.

Watch the full webinar above.

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