Helena Wright @Moonwater: "✈️𝙏𝙪𝙧𝙗𝙪𝙡𝙚𝙣𝙘𝙚 𝘼𝙝𝙚𝙖𝙙? 𝙒𝙝𝙖𝙩 𝙀𝙫𝙚𝙧𝙮 𝙄𝙣𝙫𝙚𝙨𝙩𝙤𝙧..."

South Africa

✈️𝙏𝙪𝙧𝙗𝙪𝙡𝙚𝙣𝙘𝙚 𝘼𝙝𝙚𝙖𝙙? 𝙒𝙝𝙖𝙩 𝙀𝙫𝙚𝙧𝙮 𝙄𝙣𝙫𝙚𝙨𝙩𝙤𝙧 𝙉𝙚𝙚𝙙𝙨 𝙩𝙤 𝙆𝙣𝙤𝙬 𝘼𝙗𝙤𝙪𝙩 𝘼𝙞𝙧𝙡𝙞𝙣𝙚𝙨 𝙍𝙞𝙜𝙝𝙩 𝙉𝙤𝙬 Passenger airline investing in 2026 is characterised by: - strong passenger demand - against the back of macroeconomic headwinds - record profitability - thin margins (IATA expects 3.9%, but it often drops below cost of capital) resulting in a high-risk high-reward scenario. The sector was considered attractive for its post-pandemic recovery, but airlines must manage several 𝙨𝙚𝙣𝙨𝙞𝙩𝙞𝙫𝙞𝙩𝙞𝙚𝙨 which include: 𝗙𝘂𝗲𝗹 prices have an immediate impact on profitability as tickets are sold in advance of increases. 𝗖𝗮𝗽𝗮𝗰𝗶𝘁𝘆 utilization increases as less new planes enter the sky due to supply chain issues. 𝗔𝗻𝗰𝗶𝗹𝗹𝗮𝗿𝘆 𝗰𝗵𝗮𝗿𝗴𝗲𝘀 are 14% of airline revenues with baggage, seat selection and class upgrades to buffer costs. 𝙄𝙣𝙫𝙚𝙨𝙩𝙞𝙣𝙜 𝙘𝙤𝙣𝙨𝙞𝙙𝙚𝙧𝙖𝙩𝙞𝙤𝙣𝙨: - Carriers with strong balance sheets could be undervalued following the recent declines - There is a balance between passing costs to consumers and retaining demand - Easing of oil prices will take a while as the tapering down is dependent on the volume of higher priced oil in the system - Capacity utilization must be optimized to manage constraints due to the supply of new planes - Small carriers might be consolidated into larger carriers due to its ability to absorb higher cost - Sustainability will be an added cost in the future 𝓢𝓮𝓮 𝓽𝓱𝓮 𝓽𝓪𝓫𝓵𝓮 𝓫𝓮𝓵𝓸𝔀 𝓯𝓸𝓻 𝓽𝓱𝓮 𝓪𝓷𝓪𝓵𝔂𝓼𝓽 𝓯𝓸𝓻𝓮𝓬𝓪𝓼𝓽 𝓪𝓷𝓭 𝓟𝓔 𝓯𝓸𝓻 𝓴𝓮𝔂 𝓪𝓲𝓻𝓵𝓲𝓷𝓮𝓼. 𝙏𝙞𝙥𝙨 𝙛𝙤𝙧 𝙞𝙣𝙫𝙚𝙨𝙩𝙞𝙣𝙜 - Companies with younger more fuel-efficient fleets have massive advantage to those with older fleets - Look out for companies like Delta increasing market share by absorbing smaller carriers - Strong loyalty programs and premium “leisure” demand customers are less price-sensitive and help insulate the bottom line against rising operating costs. - Mitigate high volatility of single companies by investing in airline ETFs 𝙆𝙚𝙮 𝙏𝙖𝙠𝙚𝙖𝙬𝙖𝙮𝙨 The Golden area of travel demand is here, but small shifts in operating costs can wipe out the margins. What is your take on passenger airlines? Let’s discuss in the comments. 𝘿𝙞𝙨𝙘𝙡𝙖𝙞𝙢𝙚𝙧 This is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Investing involves risks, and you may lose capital. $AAL (American Airlines Group Inc) $UAL (United Airlines Holdings Inc) $DAL (Delta Air Lines Inc (DE))

Not investment advice. The author may have financial interests in the mentioned instruments.