6/24/2023 0 Comments Growing up skipper commercialThis is the difference between the returns a company makes after taking into account its invested capital and the alternative returns of equal-risk opportunities investors have access to, measured by the weighted average cost of capital (WACC).Īs we have noted, the pandemic wreaked financial devastation across the aviation value chain, most notably for airlines. We have looked at all value chain players: original equipment manufacturers (OEMs) of aircraft lessors air navigation service providers (ANSP) airports catering operations ground services maintenance, repair, and overhaul (MRO) airlines freight forwarders and global distribution system (GDS).Īs a measure of value creation, we look at economic profit. Since 2005, McKinsey, often in collaboration with the International Air Transport Association (IATA), has assessed the performance of the entire aviation value chain-that is, the degree to which each subsector earns its cost of capital. Breaking down the global aviation value chain by subsector Fiscal year 2021 data are not yet available for all the companies covered in this analysis, so this article draws insights mostly from the 2012–20 data, supplemented by observations of key developments in 2021. The second article explores what airline executives could consider doing to generate more value for their carriers-for instance, examining their cost base and accelerating capital turnover. This article, the first in a two-part series, provides an overview of global aviation’s performance during the pandemic, by subsector. ![]() Although the temptation is to pin the blame solely on the pandemic-induced plunge in passenger traffic, that would be to ignore the airline industry’s underlying and long-term health problems. ![]() The COVID-19 pandemic is entering its endemic stages in some parts of the world at the time of writing, and airlines hemorrhaged $168 billion in economic losses in 2020.
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