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Low-cost players win, traditional airlines fail

profitability

Strict cost control and an ultra-low-cost model led to higher profit margins at the two major discount European airlines, Wizz Air and Ryanair, even before the pandemic – at least compared to Lufthansa and Air France-KLM. Among the traditional airlines, only IAG, which was formed from the merger of British Airways and Spain, has been able to approach the two low-cost giants in terms of operating profit levels based on past performance, and the merger appears to have improved cost efficiency to the company.

The coronavirus pandemic and the global shutdown of aviation have severely affected both sectors.

Since most of the machines were standing on the ground, the better efficiency inherent in the daily operation of the low-cost seats did not matter, and fixed costs such as renting the machines or the cost of parking at the airport affected everyone. Without selection, both sectors have taken a heavy toll due to the coronavirus pandemic.

What is the article talking about?

  • Profitability is improving everywhere, but here too the sector is falling apart.
  • There are places where we had a lot of revenue levels before the crisis.
  • Pricing also shows investors’ value judgments.
  • The technical picture for airlines that follow the traditional model is dire.

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