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Airlines – what happens when ROIC looks too good

So much for IATA’s prediction last year of “Normal profits are becoming normal for airlines”, or the thesis that airlines would again be able to pass on higher fuel prices to customers by charging higher fares. Someone must have forgotten to tell Ryanair, as they cut a further 10 percentage points from their current year earnings […]

“Normal profits are becoming normal for airlines” – be afraid!

Recency bias is alive and well. “At long last, normal profits are becoming normal for airlines”, so says the IATA in its June 2018 industry update titled “Solid Profits Despite Rising Costs”. After a couple of years of improving margins and ROIC, is this a paradigm shift for investors to jump aboard? Unfortunately, it feels […]