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1、Understanding the pandemics impact on the aviation value chainDecember 2022ContentsINTRODUCTION 3EXECUTIVE SUMMARY 4TAKING A STEP BACK:PRE-PANDEMIC VALUE CHAIN PERFORMANCE 5CHANGES DURING THE PANDEMIC 6PERFORMANCE AND RECOVERY BY SECTOR 7 Airlines 7 Airports and air navigation service providers 11 O
2、riginal equipment manufacturers and lessors 12 Catering,ground handling,and maintenance,repair and overhaul 13 Global distribution systems Travel tech 14 Cargo airlines and freight forwarders 15VALUE CHAIN DYNAMICS 16EXPANDING THE VALUE CREATED BY ALL VALUE CHAIN PARTICIPANTS 18CONCLUSION 21ANNEX A:
3、DEFINITIONS 22ANNEX B:EXAMPLE ROIC CALCULATION 22ANNEX C:WACC ESTIMATES 23ANNEX D:COMPANIES INCLUDED IN THE ANALYSIS 24This work is independent,reflects the views of IATA and McKinsey,and has not been commissioned by any business,government,or other institution.3Understanding the pandemics impact on
4、 the aviation value chain IntroductionSince 2005,IATA and McKinsey&Company have jointly looked at value creation across the aviation value chain.This analysis examines the entire value chain,covering aircraft and engine original equipment manufacturers(OEMs);lessors;airports;air navigation service p
5、roviders(ANSPs);ground handlers;maintenance,repair,and overhaul(MRO)providers;catering companies;airlines;global distribution systems(GDSs);and freight forwarders.The value chain analysis presented here excludes upstream value creation by oil companies.Given the differentiated nature of oil companie
6、s,profits attributed to jet fuel production alone are not transparent.Hence,this has been excluded.While acknowledging the human toll the COVID-19 pandemic has exacted,the focus here is on economic value creation,defined as the difference between the return on invested capital(ROIC)and the weighted
7、average cost of capital(WACC)thereby taking the lens of an investor.ROIC measures the earnings available to pay debt and equity investors in relation to the capital invested.The WACC can be seen as the opportunity cost for the investor,as it is a measure of the alternative return the investor could
8、have had if the capital were invested in an asset with a similar risk profile.The difference between the two indicates economic profitability.If the ROIC is greater than the WACC,then value is being created.Conversely,if the ROIC is lower than the WACC,then economic value is being lost.This report c
9、overs 2020 and 2021 and deepens the assessment of value creation by including a larger sample of companies in each sector.COVID-19 led,and still leads,to significant loss of lives,and daily life has been upended in countless ways.Businesses are affected in various ways too.This report provides a sta
10、rting point for understanding performance pre-pandemic and during COVID-19,and aims to inform the debate about how to enhance value creation and efficiency across the whole value chain.(For an analysis of the aviation value chain in 2020,please see McKinseys article Taking stock of the pandemics imp
11、act on global aviation).First,the report investigates the longer-term performance of the value chain.It then dives deeper by sector to understand what drives that performance.Next,it assesses the value chain dynamics and forces acting upon the airline sector which help explain performance.It conclud
12、es by looking at what could be done to enhance value creation in the value chain going forward.4Understanding the Pandemics Impact on the Aviation Value Chain Executive summaryThe aviation value chain consists of a diverse set of sectors in terms of size,structure and performance.Pre-pandemic,the va
13、lue chain as a whole generated an economic loss of approximately USD 5 billion per year.Airlines consistently were the weakest link across the value chain,generating an economic loss of approximately USD 18 billion per year.Amid lockdowns and travel restrictions,all sectors making up the aviation va
14、lue chain suffered significant losses in 2020 and 2021-except for air cargo carriers and freight forwarders who experienced yield increases given undersupply and sustained demand.With economic losses of USD 175 billion in 2020 and USD 104 billion in 2021,airlines showed the largest economic losses d
15、uring the pandemic.Of the other sectors,those with greater shares of fixed costs,such as airports,suffered more and saw less ROIC recovery in 2021 versus 2020 than those with a more variable cost base,such as ground handlers.The great disparity of returns across the value chain where some sectors ma
16、tch the most profitable sectors globally,and others are near the bottom of cross-sector performance existed long before the pandemic.Airlines under-performance has its roots in factors such as low entry and high exit barriers,high sensitivity to external shocks,the fragmented nature of the industry,
17、and a more concentrated supplier landscape,to name a few.As the value chain is only as strong as its weakest link,all sectors that make up the chain have an interest in one anothers ability to perform.To expand the value created for all participants,value chain partners can consider various mutually
18、 reinforcing steps.These include improving service and reliability by working together across the value chain,pursuing opportunities for greater data and insights sharing,removing inefficiencies in the value chain,working together on decarbonization,collaborating to meet ever-changing demand in cust
19、omer segments,and enhancing resilience and robustness.Aviation makes a significant economic contribution to societies globally.By jointly working to enhance performance across the value chain,all sectors should be able to generate a a return to its investors beyond the minimum based on its risk prof
20、ile.5Understanding the pandemics impact on the aviation value chain The aviation sector is impacted by all forms of macro-economic,natural,and other shocks,rendering the sector highly cyclical.Over time,the sector,and airlines in particular,have accumulated considerable expertise in crisis managemen
21、t.Those skills were in full display during the pandemic,as airlines took full advantage of the new opportunities in air cargo in innovative ways.Prior to the pandemic,the Global Financial Crisis too brought greater resilience to the industry,led by North America.In its wake,airlines posted uninterru
22、pted operating profits from 2010 to 2019 a period that attracted considerable investor interest to the airline industry.Profitability was not uniform across the airline industry,however,and was the highest in markets with fewer infrastructure constraints,favorable regulatory environments,and a great
23、er openness to consolidation.In spite of this period of consistent operating profits,the airline sector did not produce economic returns defined as the difference between the return on invested capital(ROIC)and the weighted average cost of capital(WACC)(Exhibit 1).In fact,on this basis,airlines were
24、 consistently the weakest link across the aviation value chain over the 2012-19 period(Exhibit 2).Jet fuel prices fluctuated significantly between 2012 and 2019,with a low point of approximately USD 52 per barrel in 2016 to a high point of USD 130 per barrel in 2012.As a result,the fuel share of air
25、line operating expenses fluctuated between 22%and 33%in this period.Airline sector ROIC averaged approximately 6%during this period,versus 8%for the oil&gas sector.Pre-COVID-19,the air transport value chain generated an economic loss of USD 5 billion p.a.driven by large airlines lossesAverage annual
26、 economic profit/loss by subsector,2012-2019,USD Billion 1Manufacturers1.Based on invested capital excluding goodwill,extrapolated to total industry.2.Computed as cumulative economic profit divided by cumulative sector revenue over the period.3.Sector economic profit for lessors estimated based on s
27、ample economic profit as share of revenue and as share of fleet value,the combination of which is expressed as a range.2.21.9%0.1%4.4%3.0%3.8%5.1%0.9%-2.4%2.1%8.5%Lessors 3(0.1)0.2ANSP1.0Airports4.60.61.50.32.00.7CateringGroundMROAirlinesFreightForwardersGDS/Travel TechTOTALxxEconomic profit as shar
28、e of revenue 2,%Source:McKinsey value chain modelling for IATA(5.3)(4.9)(17.9)ROIC for the airline industry remained below WACC in pre-COVID-19 years;worst ever result in 2020 with improvement in 2021Airline industry ROIC excluding goodwill vs.median WACC,1996-2021,%ROIC excluding goodwill1086420199
29、6980002040608022-2-4-6-8-10-12Median WACCSource:McKinsey value chain modelling for IATAExhibit 1Exhibit 2Taking a step back:Pre-pandemic value chain performance6Understanding the pandemics impact on the aviation value chain Changes during the pandemicGlobal airline traffic(measured by rev
30、enue passenger kilometers)declined by 66%in 2020,and by 58%in 2021,compared to 2019,producing an economic loss of USD 244 billion in 2020 and USD 146 billion in 2021 across the value chain(Exhibit 3).These are hyperbolic losses,considering that in the best year for the value chain,2015,economic prof
31、it was limited to USD 12 billion for all sectors combined.Amid lockdowns and travel restrictions,all aviation sectors suffered significant losses in 2020 and 2021 except for air cargo carriers and freight forwarders where supply-demand imbalances led to increases in yields,and value creation.Sectors
32、 with greater shares of fixed costs,such as airports,suffered more than those with a more variable cost base,e.g.,ground handlers,while airlines lost the most.ROIC improved across the value chain in 2021 compared to 2020,and the rebound in terms of the degree of change in ROIC differed materially by
33、 sector(Exhibit 4).Airports rebounded the least compared to other aviation sectors in 2021,with ROIC improving by 0.9 percentage points.At the other end of the spectrum,the manufacturers showed a 24.5 percentage point increase in ROIC.The other sectors in the value chain saw their ROIC rise by betwe
34、en 5 and 10 percentage points,generally speaking.Nevertheless,all sectors,except the freight forwarders,stayed in the red in 2021.Jet fuel prices initially came down in 2020,from approximately USD 80 per barrel in 2019 to USD 47 in 2020.But in 2021,prices rebounded to USD 78,and the forecast average
35、 for 2022 is USD 126.Where airline sector ROIC came to-5.9%in 2021 as a result of the pandemic,the oil&gas sector reached 11.4%.Exhibit 3Exhibit 4In 2021,all subsectors noted sizable economic losses air cargo was the only bright spotEconomic profit/loss by subsector,2021,USD Billion 1Manufacturers1.
36、Based on invested capital excluding goodwill,extrapolated to total industry.2.Computed as cumulative economic profit divided by cumulative sector revenue over the period.(4.4)-6.9%-14%-9.3%-39.5%-12.6%-3.1%-2.7%-20.6%5.8%-22.4%Lessors(4.9)(4.6)ANSP(1.5)Airports(34.3)(1.7)(0.8)(0.8)6.8(0.8)CateringGr
37、oundMROAirlinesFreightForwardersGDS/Travel TechTOTAL4.1xxEconomic profit as share of revenue 2,%Source:McKinsey value chain modelling for IATA(146)(104.1)ROIC change 2021 vs.2020:OEMs and freight forwarders in the leadManufacturersROIC change 2021 vs.2020Percentage pointsChange in economic profit 20
38、21 vs.2020USD Billion1.Change in ROE.Source:McKinsey value chain modelling for IATALessors5.1 13.8ANSP5.12.0Airports0.94.7Catering4.70.3Ground10.72.8MRO7.91.2Airlines6.871.3Freight Forwarders16.83.8GDS8.50.424.57.77Understanding the pandemics impact on the aviation value chain Performance and recove
39、ry by sectorAirlinesThe airline sector produced an economic loss of USD 175 billion in 2020(10 times larger than the average annual value destruction pre-pandemic)and USD 104 billion in 2021,resulting in economic profit margins of-46%and-21%respectively.Plotting the economic profit of companies,orde
40、red from low performers to best performers,reveals a power curve1;Power curves have tails that rise and fall at exponential rates,with long flatlands of middle-performing companies.Airlines power curves are,unsurprisingly,skewed to the negative.The vast majority of airlines,104 out of a sample of 11
41、1 in 2019,find themselves in the middle flatland or at the left tail-end,again illustrating the general characterization of the industry as one that is highly competitive and for the most part producing slim margins.However,the power curve shows that despite overall economic losses,there are always
42、a small number of airlines that do achieve a return above the cost of capital(Exhibit 5).These airlines differ in composition,are from different regions,and have different business models some are low cost and some follow a network business model,and many have borrowed from each other and become hyb
43、rid business models.The outperformance of these airlines can be explained by the market context and carrier-specific factors.For instance,some airlines may be active in more mature markets where capacity growth is in line with underlying demand growth.Others may exhibit excellence in factors importa
44、nt for attracting customers or maximizing asset productivity,such as ancillary sales,a unique network portfolio,and operational excellence2.Frequent flyer programmes,too,can be a source of significant value for airlines.To illustrate,it is not uncommon for large North American network carriers to ge
45、nerate annual revenue of USD 3-5 billion through mileage sales to financial institution partners.This revenue stream has also proven to be less volatile during the pandemic compared to passenger revenues.1 Martin Hirt,Is your strategy good enough to move you up on the power curve?,McKinsey,January 3
46、0,2018.2 Jaap Bouwer,Alex Dichter,Vik Krishnan,and Steve Saxon,The six secrets of profitable airlines,McKinsey,June 28,2022.The airline industry power curve shows the large variation in performance by yearAirline industry economic profit power curve 1,USD Million2001AirlinesValue creators3,0002,0001
47、,0000-2,000-1,000-3,000-4,000-5,000-6,000-7,000200820.Number of carriers by year differs,power curve lines stretched to make equal,i.e.,lines show more the distribution than the actual number of airlines.Source:McKinsey value chain modelling for IATAExhibit 58Understanding the pandemics i
48、mpact on the aviation value chain Performance and recovery by sectorAir cargo was a clear,and much-needed,area of relief during the pandemic.In 2021,of the nine value-creating airlines in the sample,seven had significant or pure cargo operations.Global air cargo tonnage was roughly 7%higher in 2021
49、than in 2019.Airlines idled widebodies as long-haul passenger demand evaporated given travel restrictions.Bellies of passenger aircraft used on long-haul flights contribute around half of global cargo capacity normally.Strong demand,coupled with a sharp reduction in supply,led to cargo yields spikin
50、g.Consequently,carriers more exposed to air cargo saw less of a decline in ROIC,and several pure-play air cargo carriers began to create value.Airlines with limited cargo activity saw the greatest drop in ROIC in 2021(Exhibit 6).Low cost carriers(LCCs)outperformed network carriers in terms of ROIC p
51、re-pandemic(Exhibit 7).The traditional LCC model focuses on shorter haul point-to-point travel,which can reduce costs through higher aircraft utilization and a more simplified aircraft fleet.It also reduces cost through flying to secondary airports,increased seat density,and greater online distribut
52、ion share,to name a few.During the pandemic,LCCs performed worse however.An absence of air cargo may help to explain this.806040200055404550556065707580859095100-20-40-60Source:McKinsey value chain modelling for IATAMore cargo led to higher returns during the pandemicROIC 2021,ex goodwill
53、 and after tax,%NetworkCargo revenue share2021,%CargoLow costExhibit 6Exhibit 7LCCs in sample performed better than network carriers pre-COVID-19,but worse during the pandemicNetwork versus low cost carrier ROIC ex goodwill,weighted average,2012-2021,%681012420-2-4200018-6-8-10
54、-12-14-16LCCNetworkSource:McKinsey value chain modelling for IATABased on Sample:not Representative of Full Sector2020201920219Understanding the pandemics impact on the aviation value chain Performance and recovery by sectorAirline performance differs significantly by region(Exhibit8).Pre-pandemic,N
55、orth America was the only value-creating region.This may have been due,in part,to a more consolidated and mature market,with only moderate capacity additions(Exhibit 9).The top-5 carriers share of scheduled seat capacity reached approximately 80%in North America and ROIC performance was significantl
56、y higher versus other regions.Latin America,too,showed a higher degree of consolidation,albeit not as high as North America.ROIC performance in Latin America lagged North America driven,in part,by greater capacity additions.Exhibit 8Exhibit 920202021Pre-COVID-19,North America was the only region whe
57、re airlines created valueAnnual airline sector economic profit by region,2012-2021,USD BillionMiddle East/Africa-70-65-60-55-50-45-40-35-30-25-20-15-10-5020001951015Latin AmericaNorth AmericaAsia PacificEuropeSource:McKinsey value chain modelling for IATA2012North America showe
58、d most consolidation and best ROIC performance pre-pandemicTop 5 airline group share of scheduled seats within region 1 versus airline ROIC ex goodwill by region,2000-2021,%70809020000550005500051015100-10-20-30ROICTop 5 shareNumber of carriers per region 2 North Ame
59、ricaLatin AmericaEuropeAfrica&Middle EastAsia PacificSource:McKinsey value chain modeling for IATA;Diio mi1.North America seen as United States and Canada.Europe includes Turkey,Russia.Latin America includes Mexico.2.Per August 2022.Individual active carriers.20202020202020202020 xx328710
60、Understanding the pandemics impact on the aviation value chain Performance and recovery by sectorAirlines largest operating cost component,jet fuel,showed considerable volatility during the pandemic.After initially dropping by approximately 40%year-on-year in 2020,prices increased by around 70%in 20
61、21 and by another 43%in 2022,adding to cost pressure.Given the historic impact of the pandemic on performance,the airline sector took on significant amounts of debt during COVID-19(Exhibit 10).Only one third of the debt taken on in 2020 was supported by governments,showing remarkable access to credi
62、t markets in this time of crisis.Innovatively,multiple airlines used their frequent flyer programmes as collateral to secure new loans.Nonetheless,the additional debt burden has seen credit scores move down several notches.The share of tracked airlines with a C or D rating increased from 5%to 29%bet
63、ween 2019 and 2021.The reduction in credit ratings could on average lift the cost of funds by 1 percentage point and add to the financial challenges ahead(Exhibit 11).The airline industry became significantly more indebted during COVID-19Estimated change in global airline sector debt,USD BillionDebt
64、 2019GovernmentLoansDeferredTaxesGovernmentLoans GuaranteesBond issuance(Secured,UnsecuredConvertible)CommercialLoansOther(Dip Loan,Loyalty,Programme)Debt 202058142878398Source:IATA651+51%430Government-sourcedCapital markets-sourcedExhibit 10Exhibit 11Credit ratings worsened significantly during the
65、 pandemicAirline industry distribution of credit ratings,share of S&P tracked airlines 1,%1.Sample size 2019:22,2020:23,2021:21.Average of sampleAA-A+AA-BBB+BBBBBB-BB+BBBB-B+BB-CCC+CCCCCC-CCCD0%0%0%0%14%14%9%9%9%23%14%0%5%5%0%0%0%0%0%0%0%0%0%0%0%4%0%13%9%13%13%13%13%0%0%4%0%17%0%0%0%0%0%0%5%5%14%5%1
66、9%14%10%14%5%0%0%0%10%Source:S&PInvestmentGradePre-COVID-19(2019)20202021Junk28%5%4%34%5%29%11Understanding the pandemics impact on the aviation value chain Performance and recovery by sectorAirports and air navigation service providersAirports generated around USD 4 to 5 billion in annual economic
67、profit between 2012-2019.Both airports and airlines ROIC fluctuated between 4%and 8%,but as airlines bear more risk and have a higher WACC,they generated economic losses over the same period3.If we were to exclude North American airports which operate on a utility-like not-for-profit basis,the airpo
68、rt ROIC globally is higher,varying as a function of regulatory regimes and till structures as well as revenues from non-aeronautical sources.The pandemic drove airports pre-COVID-19 positive ROIC of around 6%into negative territory in 2020 and 2021.Airports have broadly been more resilient than airl
69、ines in this respect(Exhibit 12).Airports faced drops in aeronautical revenues and passenger-related retail and services.Unsurprisingly,given the depth of the crisis,many airports both needed and received government support through COVID-19,which combined with continued inflows from real estate and
70、other sources,lessened the impact of the crisis.ANSPs are mostly government-run,though private in countries such as Canada and the United Kingdom.The sector is highly fragmented at the macro level,with many individual ANSPs,but highly concentrated at the local level,with typically one ANSP covering
71、one country.The ANSP sector reported profits above WACC levels pre-pandemic.ROIC for the sector was about 8%between 2012 and 2019 versus about 6%for airlines(Exhibit 12).ANSPs ROIC in 2020 and 2021 dropped to about-7%and-2%respectively,given high fixed costs and overheads,and the reduced level of fl
72、ight activity.In 2021,global scheduled flights were down approximately 36%compared to 2019.ANSP and airport returns compared to airlinesROIC,excluding goodwill,2012-2021,%Airports200019-2-4-6-8-10-12-14AirlinesANSPSource:McKinsey value chain modelling for IATA2021202
73、0Exhibit 123 McKinsey value chain modeling for IATA.12Understanding the pandemics impact on the aviation value chain Performance and recovery by sectorOriginal equipment manufacturers and lessors The aircraft and engine OEM sector generated returns that outperformed airlines pre-pandemic,earning a R
74、OIC of about 16%between 2012 and 2019(Exhibit 13).As the pandemic hit,OEMs ROIC fell to-26%in 2020 and-2%in 2021.In 2020,global commercial aircraft orders were down 54%in 2019 but rebounded strongly by 154%year-on-year in 2021.This led to a relatively strong improvement in performance albeit with ne
75、gative economic profit in 2021.Aircraft manufacturing is a consolidated,global market where companies also earn a return through after-market services.Entry barriers are high given the capital needs for aircraft programs and the considerable know-how and expertise involved.Aircraft programs are comp
76、lex and lengthy,and some manufacturers have experienced production challenges in recent years,which dented profitability.There are some relatively new entrants in the market,particularly those that produce aircraft with fewer than 120 seats.Lessors earned a return on equity of about 9%pre-pandemic.I
77、n 2020,returns fell to approximately 0%as lease rates plummeted and demand decreased.The leasing market has high barriers to entry but is fairly fragmented.Some consolidation has occurred,but new companies are entering the market as well.It is a sector where there is value in diversifying portfolios
78、,to spread risk and tap into different growth rates.There have been some defaults,and some lessors underwent restructurings in recent years.Lessors have seen their share of the commercial aircraft fleet grow over time.For narrowbody aircraft,the share of leased aircraft globally increased from 42%in
79、 2010 to 51%in 2022,where for widebodies,the share grew from 27%to 35%.Over that period,airlines turned increasingly to leasing and to sale-and-leaseback solutions in order to limit equity requirements and gain some flexibility.Overall,lessors bounced back strongly in 2021.The sector roughly halved
80、its economic loss in 2021 though performance varies widely.Some airlines have renegotiated and restructured leases,for example adopting power-by-the-hour arrangements,especially those which went through a bankruptcy or court-led restructuring.Still,the majority of airlines have continued to pay leas
81、es,in some cases with a restructuring or deferral of payments.OEM and lessor returns compared to airlinesROIC,excluding goodwill,2012-2021,%Lessors 001620172018-5-10-15-20-25-30AirlinesOEMsSource:McKinsey value chain modelling for IATA2020201920211.ROE.Exhibit 1313Un
82、derstanding the pandemics impact on the aviation value chain Performance and recovery by sectorCatering,ground handling and maintenance,repairand overhaul Pre-pandemic,the catering,ground handling,and MRO sectorsoutperformed the airline sector consistently in terms of ROIC(Exhibit 14).Ground handler
83、s ROIC was approximately 16%between 2012 and 2019.When traffic dropped in 2020,ROICfell to-7%.The sector recovered well compared to others interms of ROIC improvement in 2021.Ground handlers revenues are driven by passenger and freight volumes and the sector has lower fixed costs compared to other a
84、viation sectors.The catering sectors ROIC was approximately 20%between 2012 and 2019.Catering faces similar passenger-variable revenue streams and relatively low fixed costs as the ground handler sector,with labor representing a significant share of operating expenses.For both segments,the market at
85、 a global level appears fragmented,but is more concentrated at a local airport-specific level.There is ongoing consolidation activity.The global passenger volume,as core driver of caterers revenue,fell by approximately 59%in 2020 and by 52%in 2021,versus 2019.Furthermore,long-haul passengers,who gen
86、erate more catering revenue,showed a greater reduction.As a result,caterers ROIC dropped to-21%in 2020 and-16%in 2021.MROs fared better in 2021 compared to 2020,with a ROICof 3%in 2021,up from-5%in 2020.At a global level,themarket is fairly fragmented,but there are geographical andcomponent-related
87、niches where the landscape is moreconcentrated.MROs exhibit large structural differences bytype of maintenance.Base maintenance on the air framesis mostly labor driven,with less differentiation across firms,where engine MRO is more concentrated and has significantOEM involvement.Line maintenance is
88、highly fragmentedwith little opportunity for differentiation,but there can be localmarket concentration.Barriers to entry overall are relativelyhigh given the technological know-how and certificationrequired.Catering,ground handling and MRO returns compared to airlinesROIC,excluding goodwill,2012-20
89、21,%MRO253020001620172018-5-10-15-20-25AirlinesGround servicesCateringSource:McKinsey value chain modelling for IATA201920212020Exhibit 144 https:/www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance-june-2022-data-tables.14Underst
90、anding the pandemics impact on the aviation value chain Performance and recovery by sectorGlobal distribution systems Travel tech Pre-pandemic,GDSs were the best performing sector in the value chain on an economic margin basis,with ROIC significantly above the airline sector(Exhibit 15).There are hi
91、gh entry barriers on the distribution side,given the need to build out a global network of travel agencies and airlines.On the IT side,the core system is the passenger service system(PSS)which is mostly supplied by two organizations.This leads to a highly concentrated industry.Many airlines continue
92、 to depend on GDSs for broad reach in their distribution,particularly for high-value corporate traffic.In 2020 and 2021 ROIC for the sector dropped significantly,to-16%and-8%respectively.The GDS sectors prime revenue source lies in segment-linked booking fees,but most companies have evolved into tra
93、vel software ecosystem businesses that offer a broader array of services.Through the pandemic,sales shifted towards online bookings through the and mobile channels,particularly as business-travel volumes were harder hit than leisure travel.To illustrate,the share of airline direct supplier online bo
94、okings in the United States increased from 50%in 2019 to 64%in 20215,and globally from 39%to 48%(Exhibit 16).Distribution will likely continue to be a dynamic sector as travel recovers post-COVID-19.Airlines may retain some of the direct distribution share even as international travel returns.IATAs
95、New Distribution Capability(NDC)is transforming the way airlines distribute their products through GDS and beyond,and could also potentially lead to new commercial relationships.5 PhocusWright US Airline Market Report 2021-25.GDS Travel tech returns compared to airlinesROIC,excluding goodwill,2012-2
96、021,%GDS Travel tech303525200-5-10-15-20AirlinesSource:McKinsey value chain modelling for IATA201920212020Exhibit 15Exhibit 16During COVID-19 a larger share of bookings went through direct/online channelsBreakdown of airline gross bookings by channel,global,share of
97、bookings,%and USD BillionOTAOnline supplier directOfflineSource:PhocusWright100%=10%451201023%67%201151310%25%64%201253411%27%63%201354811%28%60%201455512%30%58%201552212%32%56%201652813%34%54%201757013%35%51%201861914%37%49%201963114%39%46%202020617%43%40%202128218%48%35%15Understanding the pandemi
98、cs impact on the aviation value chain Performance and recovery by sectorCargo airlines and freight forwarders Cargo was the only bright spot for the value chain in 2020 and 2021(Exhibit 17).Of the nine airlines that were value creating in 2021,seven had significant or fully cargo-driven operations.G
99、oing forward,cargo yields are expected to remain elevated,and come down gradually as more belly capacity is reinstated.Freight forwarders play an important role in air freight,with approximately 80%of air cargo volumes being handled by this sector.It is a fragmented sector,with the top companies acc
100、ounting for around 35%of sector revenue,but there is consolidation activity.Freight forwarding has a highly variable cost base and started out as an asset-light business.As the industry developed,the need increased to develop more sophisticated IT and offer,amongst others,tracking systems.Most forwa
101、rders now offer certain logistics services as well warehousing and consolidation,for instance.Larger players differentiate themselves through sales and support infrastructure globally to service larger shippers,and can secure access to airline capacity at preferential terms.Thus,over time,the sector
102、 has become harder to enter.That said,forwarders are still flexible businesses,with high capital turnover.The average revenue per invested dollar of capital was approximately USD 4.1,versus USD 0.9 for the airline sector in 2019.During 2012 to 2019,freight forwarder ROIC averaged approximately 16%.A
103、s profitability is linked with air cargo volumes and freight rates,performance improved significantly during the pandemic,with ROIC moving to 22%in 2020 and 39%in 2021.Freight forwarder and cargo carrier returns compared to airlinesROIC,excluding goodwill,2012-2021,%3540302520320142015201
104、62017201850-5-10-020Source:McKinsey value chain modelling for IATA1.Full freighter pure play carriers only.Pure cargo carriers 1AirlinesFreight forwardersExhibit 1716Understanding the pandemics impact on the aviation value chain Value chain dynamicsThere is a great disparity of returns ac
105、ross the air transport value chain,where some links in the chain can be compared to the most profitable industries in other sectors,and other links struggle to keep up with the utilities sector(Exhibit 18).Airlines in particular have underperformed,and this has its roots in several factors:low entry
106、 and high exit barriers,a high share of fixed costs,high sensitivity to external demand shocks,a fragmented industry,and a more concentrated supplier landscape,to name a few.This creates a highly challenging environment and has to led to uneven distribution of profits across the value chain.The degr
107、ee of global fragmentation,measured here through the share of sector revenue accounted for by the top 5 companies,differs significantly between sectors,as does the degree to which sectors compete globally.With some sectors,such as airports,ground handlers and caterers,the global degree of fragmentat
108、ion can differ from the local picture at a particular city.Performance across the aviation value chain compared to other sectors over the past 20 yearsEconomic profit margin quartile range by industry 1,ex goodwill,2002-2021,select industries,%1.Data set includes global top 5000 companies by market
109、cap in 2021,excluding insurance and banks.2.Indicative and for entire industry.Top 5 share will differ based on segments within industries(e.g.,Chemicals consists of many different sub-industries,not all chemicals players are active in all).OEMs:top 5 OEM share of 2019 value of produced aircraft.Les
110、sors:top 5 lessor share of leased fleet value Q4 2021.Airports:top 5 airport group revenue share out of total 2019 market size.Catering:top 5 caterer share of 2019 total market revenue.Ground:top 5 share of 2019 market revenue.Airlines:top 5 airline group revenue share out of total 2019 industry rev
111、enue.Freight Forwarders:top 5 air forwarder revenue share.All other sectors:share of top 5 2021 as share of total revenue in sector based on global top 5000 companies by market cap.MedianNumber of firms in sampleAviation value chain industryQuartile rangeTelecomMediaMedical TechnologyGDSs Travel Tec
112、hPharma&BiotechApparel,Fashion&LuxuryHigh TechBusiness ServicesConsumer Packaged GoodsConsumer ServicesAdvanced ElectronicsANSPsConsumer DurablesIn-Flight CateringGround HandlersChemicalsFreight ForwardersRetailAutomotive&AssemblyAircraft Engine OEMsLogistics&TradingAircraft MROsBasic MaterialsCongl
113、omeratesUtilitiesOil&GasAircraft LessorsAirlinesAirportsSource:McKinsey Corporate Performance Analytics;Cirium;Value Chain Model;Company reports;Airports Council International;Teal-15-10-50597867820430537339312%25%36%31%25%NA16%19%36%99%26%39%35
114、%19%19%63%59%NA16%43%20%21%36%45%30%100%51%38%42%xxTop 5 company share,global 2xx%Exhibit 1817Understanding the pandemics impact on the aviation value chain Value chain dynamicsIn 2011,IATA worked with Harvard Business Schools Professor Michael Porter to examine the forces acting upon the airline se
115、ctor and their influence on the sectors profitability.Exhibit 19 illustrates Porters framework with updated content.More than a decade since this research,and after the largest crisis the sector has ever seen,the question arises whether these forces have truly changed.The answer is likely no.Bargain
116、ing power of suppliers continues to be high.The threat of substitutes remains,and in fact increased during the pandemic given the surge in availability,acceptance,and use of online meeting tools.Barriers to entry remain relatively low and barriers to exit high.COVID-19 saw an uptick in airline start
117、-ups.In 2019,42 airlines began service,followed by 57 in 2021.New entrants were attracted into a sector by the availability of cheaper second-hand aircraft and leases,and availability of skilled pilots.There were also few bankruptcies through COVID-19.Barriers to exit remained high with various carr
118、iers receiving life support from their stakeholders.COVID-19 did not result in as large a reduction in carriers as may have been expected.In 2019,59 airlines ceased operations,and this number decreased to 53 in 2020,and 33 in 2021.Price transparency has increased further with the rise of online trav
119、el agents and metasearch comparison websites.On the supplier side,the strength of labor remains with significant unionization.Airport privatization has continued.Additionally,all aviation sectors operate in a highly regulated environment.This not only relates to safety,but also to economic performan
120、ce.Most countries have ownership limits in place for airlines,capping foreign ownership of local airlines,for instance to 25%in the US and 49%in Europe.This has the effect of limiting the free flow of capital and adding a barrier to cross-border consolidation.As such,airlines do not operate in a pol
121、icy vacuum.Competitive forces shaping the airline sector have arguably not changed or have intensifiedDegree of change observed in competitive forces for the airline sector since 2011 1 Force intensified,greater competitive pressureNo change in dynamicForce reduced,lower competitive pressureSource:M
122、cKinsey and IATA update based on original from Professor Michael Porter,20111.In 2011 this five forces analysis was originally done by Michael Porter for IATA.Threat of substitute products or services:MEDIUM and RISING Rivalry among existing competitors:HIGH Threat of new entrants:HIGHBargaining pow
123、er of channels:HIGHBargaining power of buyers:HIGHBargaining power of suppliers:HIGHPowerful labor unions especially when controlling operations at network hubs Aircraft and engine producers are both concentrated oligopolies Airports are mostly local monopoliesAirport services(handling,catering,clea
124、ning)are also concentrated in a small number of firms,but low switching costsThe number of customers who can afford air travel is increasing substantially,mainly in emerging markets Technology for web-conferencing is improving High speed trains are competitive with airlines on select short-haul rout
125、es Travel can be delayed,limited or done without Environmental issues challenge air travelGrowth has been rapid but volatile Perishable product Limited product differentiation High sunk costs per aircraft,low marginal costs per passenger Limited economies of scale Significant exit barriers Multiple
126、direct and indirect rivals Limited incumbency advantages Low switching costs Some demand-side benefits of scale Easy access to distribution channels High concentration among GDS and aggregator websites Websites increase price transparency Travel agents focus on the interests of corporate buyers to r
127、educe travel costsBuyers are fragmented Air travel perceived as a standardized product Low switching costs for most customers Price sensitive,because travel is a meaningful share of discretionary spendingExhibit 1918Understanding the pandemics impact on the aviation value chain While we focus on eco
128、nomic value in this report,aviation provides significant value in other forms.Worldwide,pre-COVID-19,aviation enabled 4.5 billion passengers to take to the air,creating new connections and reuniting families.Aviation supported around 88 million jobs directly,and accounted for just over 4%of global e
129、conomic activity.Aviation generates positive externalities,especially for countries and cities which are home to major aviation hubs,while providing an essential service in locations with poor connectivity to the global economy,and often life-saving services during the pandemic.The sectors making up
130、 the aviation value chain each contribute to the total economic value added.The airline sector is at the center of the value chain and its revenue flows(Exhibit 20).The airline sector remains a highly challenging industry where shareholders are not rewarded with the minimum return they should expect
131、 based on the risk profile of their investment.The aviation value chain was negatively impacted by the pandemic and airlines fared the worst.However,even before the pandemic,airlines were the only value chain sector where investors did not get a return above the cost of capital over a prolonged peri
132、od.What could be done to strengthen the value chain for everyone?Companies across the value chain could consider various actions to enhance the performance of the value chain as a whole,and ensure financial sustainability for all.To the extent that the chain is only as strong as its weakest link,all
133、 actors have an interest in one anothers ability to perform.Expanding the value created by all value chain participantsExhibit 20Illustrative flow of revenues within the aviation value chainPassengersFreight forwardersSource:McKinseyIndicative revenue flows within the aviation sector,2019,USD Billio
134、nsCargo shippersAirlinesTravel agentsOEMsLessorsOil companiesAirportsANSPsHandlers,caterers379319Understanding the pandemics impact on the aviation value chain Expanding the value created for all value chain participantsImproving service and reliability by working together acro
135、ss the value chain,thus attracting more customersIndividual companies across the value chain are customers and suppliers to companies in other aviation sectors,and together they are partners in the fulfilment of the customer journey.There is an opportunity for greater value chain collaboration to en
136、hance the experience for customers,thereby improving the results for all involved.Examples could include joint mapping of full customer journeys,including current challenges and where these occur,involving all sectors that influence the customer journey so it can be improved holistically,rather than
137、 by one party at a time.If the value chain can work together to improve reliability and comfort throughout the journey,demand could rise.As the value chain participant who contracts directly with the passenger,airlines are at the center of the customer relationship.However,airlines rely on airports,
138、handlers,caterers and others to bring the journey to completion(Exhibit 21).Delays are a significant source of frustration for customers,and the responsibility for them is shared across the value chain.Airlines are responsible for,amongst others,aircraft turnarounds between flights,technical and cre
139、w performance.However,delays are often under the purview of air traffic control,security,and airport conditions,in addition to the weather,the effects of which could sometimes be reduced with corrective action by the airports or the national aviation administration.Ensuring that security checks are
140、smooth,frees up time for passengers to spend in the airports,boosting retail.Swift baggage reclaim helps make a passengers onward journey hassle-free.Enhanced collaboration can only bring benefits to all parts of the value chain who depend upon the passengers airlines fly.Airlines do not own the ful
141、l end-to-end customer journey cooperation required to optimize customer experienceNot airline ownedAirline partially ownedAirline ownedJourneySub-journeyCustomerfollow-upsPost-tripIROPS 1recoveryEntertainmentIn-flightSeatingand aircraft configurationRefreshmentsand mealsIROPS 1mitigationResearchflig
142、htShop&PurchasePurchaseflightDesire/NeedTravelInspirationResearchdestinationPromotionsTransport To AirportParkingIROPS 1 earlycommunicationLoyaltyprogramsLifestyleEngagementPartnershipsCredit cardsCheck bagsAirportExperienceSecurityAirportnavigationShop and dineWait at gateIROPS 1recoveryDeplaningAr
143、rivaland On-tripImmigrationConnectionsBaggage claimCustomsTransportResearchdestinationPrepare to travelBook other(car,hotel)ArrangetraveldocumentsPackMakedeparturearrangementsCheck-infor flightSource:McKinsey1.IROPs are Irregular Operations,i.e.extraordinary situations in which a flight does not ope
144、rate as scheduled.Exhibit 2120Understanding the pandemics impact on the aviation value chain Expanding the value created for all value chain participantsPursuing opportunities for greater data and insights sharing across the value chainCompanies within the value chain are starting to put the data-ri
145、ch environment in which they operate to greater use by,for instance,using advanced data techniques to provide more tailored offers to customers,or to engage in predictive maintenance.Beyond this,there is an opportunity for greater sharing of data and insights across the value chain.This could includ
146、e enhanced data sharing between airlines,airports,and handlers about expected volumes leading to better short-term projections and enhanced operational planning at airports.Initiatives such as airport collaborative decision-making(A-CDM)could be further rolled out to enhance joint performance of the
147、 value chain and the passenger experience.A-CDMs focus lies on improving the efficiency and resilience of airport operations by encouraging airlines,airports,handlers and ANSPs to collaborate more and to exchange accurate and timely data and insights.Removing inefficiencies in the value chainTacklin
148、g inefficiencies could enhance performance for the whole chain.For example,longer than necessary flight paths within regions lead to air traffic control(ATC)inefficiencies,additional fuel burn,and associated climate impact.The European ATC body Eurocontrol indicates that flights in Europe use,on ave
149、rage,between 9%and 11%more fuel than the most efficient flight routes.Improvement initiatives,such as Europes Single European Sky,can help address these inefficiencies,boost profitability,and reduce CO2 emissions for all participants in the value chain.Working together on decarbonizationDecarbonizat
150、ion is the prime challenge at this time.Moving the airline industry to net zero by 2050 requires significant innovation and value chain cooperation,potentially through novel forms of collaboration.Sustainable aviation fuel(SAF)will play a major role in airlines path to net-zero operations but announ
151、ced supply does not equal expected demand.Decarbonization is a challenge that will require the value chain working together to solve.The industry needs fuel suppliers to invest in capacity likely backed with commitments from airlines and with support and incentives from governments.Airports need to
152、develop a new fueling infrastructure,must decarbonize their own operations,and give passengers low-carbon onward ground transport choices.Handlers and caterers need to work with their host airports,to electrify and improve energy efficiency.Airframe and engine OEMs need to develop ever-cleaner techn
153、ologies such as hydrogen-powered flight.ANSPs must innovate to reduce emissions on conventional flights,while adapting regulations to permit new forms of transport,such as eVTOL services.The investment needed is significant,and it will take everyone working together to get aviation to net zero.Colla
154、borating to meet ever-changing demand in customer segmentsAirlines and their value chain partners face ever-changing patterns of customer demand and do adapt their business models to such evolutions.The more a market matures,the more differentiated demand tends to become.Certain trends might have be
155、en accelerated because of the pandemic.To be sure,working from home has impacted the entire transportation sector in multiple ways.For airlines,this has spread out demand for flights over the week in many cases.Much speculation abounds regarding business travel in the post-COVID-19 world,but the jur
156、y is still out on whether lowered demand will be anything but transitory.On the other hand,business travelers might opt more often for economy-class travel,certainly on shorter flights.Leisure travelers have been seen to chose business class for their holiday trips.Hence,there is a fluidity among ma
157、rket segments and demand morphs constantly along the spectrum from the ultra-low-cost option to first-class travel and private jets.In response to changing customer demand,airline business models have become much more hybrid.Today,few airlines are pure in the original sense of the terms low-cost or
158、network”carriers,as both have borrowed from each other and adapted their offering.It is vital for customer-welfare maximization that the regulatory environment fosters competition,innovation,and sustainability,not only in aviation but across all modes of transportation.Consumers will then optimize t
159、heir choices and the transportation sector will be more efficient6.Enhancing resilience and robustnessAirlines have proved to be resilient,having bounced back,for the most part,from the multiple crises the world has seen since the inception of the industry.What arguably is less of a feature among ai
160、rlines is robustness,i.e.the ability to avoid falling over in the first place.Robustness can be enhanced through creating more diverse revenue streams,in addition to the habitual attention to costs.This might involve vertical and horizontal integration when that is possible,maybe even beyond the avi
161、ation value chain.Achieving robustness likely necessitates discipline in terms of capacity expansion,and a strengthening of alliances and collaboration among the airlines.In essence,the goal must be not only to grow,but to grow profitably and sustainably,in order to limit the impacts of various cris
162、es on the airline industry and the aviation value chain.6 One Size does not Fit All:A Study of how Airline Business Models have evolved to meet Demand in Europe,IATA,November 2022.21Understanding the Pandemics Impact on the Aviation Value Chain ConclusionAviation provides significant benefits to the
163、broader economy.Pre-pandemic,the aviationvalue chain overall did not generate theeconomic returns its investors expect.Thiswas led primarily by the large economic lossesof the core sector,airlines,which remain ina challenging market structure and context.COVID-19 led to significant value loss for al
164、lsectors,apart from cargo-focused ones.As aviation emerges from the pandemic,there isan opportunity to expand the value created forall participants in the value chain.This requiresperformance improvement within each sectorand also requires greater collaboration andfresh ways of working across partne
165、rs in thevalue chain.22Understanding the pandemics impact on the aviation value chain Annex A:DefinitionsAnnex B:Example ROIC calculationDefinitions1.PP&E=Property,Plant&Equipment;includes Right of use asset post IFRS16/ASC842 implementation.2.EBITA=Earning before Interest,Taxes and goodwill Amortiz
166、ation.ROICInvested capitalSource:McKinsey value chain modelling for IATADefinitionsReturn on invested capital(ROIC)measures the operating performance of the companyCalculation excludes goodwill(=amount paid over book value in an acquisition)Invested capital(IC)represents the amount invested in the o
167、perations of the businessAdjusted for operating leases(if applicable)Calculation methodologyROIC=NOPLAT/end of year operating invested capitalUsed end of year values to avoid discrepancies due to M&A,perimeter or accounting changesIC=Operating working capital+net PP&E 1+net other operating assetsBef
168、ore lease accounting change(IFRS16/ASC842):Operating leases capitalized using 7.3x factor,in line with industry practices(typically 7-8x);post accounting change RoU asset included in PP&ENOPLATAfter tax operating profit,adjusted for operating leasesNOPLAT=Adjusted EBITA 2 Taxes Taxes based on margin
169、al tax rate,differentiated per country Before IFRS16/ASC842:profit is adjusted for leases(interest component of lease expense added back to EBITA;assuming 7%interest rate)Economic profit“Excess profit”earned above the cost of capital,expressed in USD million p.a.Economic profit spreadEconomic profit
170、 margin=(ROIC-WACC)*Invested Capital=ROIC-WACC=Economic Profit/RevenuesWACCOpportunity cost of funds investedWACC=Cost of equity*equity weight +(after tax)Cost of Debt*debt weightExample ROIC calculation illustrative carrierLocal currency millionsSource:McKinsey value chain modelling for IATA1.Adjus
171、ted for operating leases,including goodwill.2.Capitalization multiple:1/(1/Depreciation period+Cost of lease).3.For companies reporting under IFRS16 or ASC842,no adjustment made to operating profit and capitalized leases replaced with published Right of Use Asset.ROIC 1,percentAdjusted EBITA1,4363.2
172、Reported EBIT(A):16,323.2RevenuesInvested capital22,385.0After tax5.4%Pretax6.5%Interest income from ST investmentDividend income from ST investmentsGain on disposal of ST investmentsExchange lossCurrency hedging gain Net gain on financial assetsLease adjustment 3:Implied interest 7%Debt equivalent:
173、4,973.4(see below)Includes operating cash:326.5(2%of sales)Receivables,inventories,prepayments,deferred accounts and other current assets:2,067.5Minus payables,sale in advance,deferred accounts and current provisions:(7,075.3)Intangibles(excl.goodwill),other LT assets(excl.derivatives),net deferred
174、accounts minus operating provisions(return costs of leased aircraft,onerous leases,other)Marginal taxrate:17%Capitalized leases 3:Net PPE:Working capital:Other:Goodwill:Adjustments:1,067.1348.14,973.422,176.3(4,636.4)(128.3)184.448679.7 aircraft lease expense7.3x multiple(assumptions:7%cost of lease
175、,15-year depreciation period)2(1.0)(0.1)(1.2)77.6(26.6)(0.7)23Understanding the pandemics impact on the aviation value chain Annex C:WACC estimatesIt is important to note that the weighted average cost of capital(WACC)used in this analysis is the opportunity cost for investors.It does not measure th
176、e actual cost of capital for the individual companies,but rather what financially minded investors would expect to earn on an asset with similar risk characteristics.To estimate WACC,the following formula is applied:The cost of debt is the post-tax return on investing in the debt.The following formu
177、la is applied:Cost of debt=(risk free rate+debt premium)(1 corporate tax rate).It varies by company specific debt premiums(based on estimated credit risk)and by country specific marginal tax rates.As noted above,this does not represent the actual cost of debt for individual companies,but rather the
178、return an investor would earn by investing in debt with that company/sectors credit risk characteristics.WACC methodology:Cost of equityMarket Risk Premium(MRP):MRP estimated each year to maintain(real)cost of equity around estimated long term average of 7%MRP=(7%+Expected inflation)-Risk Free Rate
179、Expected inflation in year N based on actual inflation for year N+1Risk Free Rates(RF):Nominal year-end 10-year US rates for all airlines US government rate is the only risk free rate;all calculations made in USD;consistent with MRP Value observed as of 31/12/xxAsset Betas:Airline(0.80);Airport(0.55
180、);ANSP(0.40);Catering(0.70);CRS(1.30);Freight Forwarders(0.80);Ground services(0.70);Leasing(1.10);Maintenance(0.70);Manufacturers(1.10)Debt Betas:Based on rating:AAA/BBB-(0.15);BB+/B+(0.20);B/B-(0.25);CCC and below(0.30)Target Debt/Equity(D/E),Airlines:Based on ratings;AAA/A-(60/40);BBB+/BBB-(67/33
181、);BB+/BB-(71/29);B+/B-(75/25);CCC(80/20),CC/-D(82/18).Estimate based on S&P credit ratios and observed valuesTarget Debt/Equity for other sectors:Airport(200%);ANSP(80%);Catering(50%);GDS(20%);Freight Forwarders(80);Ground services(50%);Maintenance(20%);Manufacturers(15%)4,500001020304050
182、607080950214,54,64,54,74,55,55,56,25,85,16,85,84,86,97,26,75,66,46,76,56,36,07,18,67,8WACC methodology:Cost of debtRisk Free Rate:10-year US government rateTax Rates:Marginal tax rates from the country of originDebt Premium based on estimated credit rating:Credit spread:Last 5-
183、year rolling average;estimated by multiplying observed credit spreads by adjustment factor(to take into account implied probability of default for lower credits):Credit rating:Actual rating else,estimated based on financial ratios:Observed spreads:Difference between yield to maturity for a basket of
184、 similarly rated 10-year company bonds(e.g.,AAA,AA,A,BBB,etc.)and yield to maturity of comparable 10-year government bondAdjustment factor applied to BBB and below ratings,based on implied probability of default and expected loss rateCapped for lower credit:highest possible spread is equal to MRPAir
185、lines:EBITDAR margin,Net Debt/EBITDAR,EBITDAR/Fixed charges,EBIT/Interest,Age of fleetAirports:EBITDA/Gross interestOthers:EBITDA/Gross interest or typical industry rating for all non rated companiesNominal post-tax WACC=cost of equity (1 gearing)+cost of debt gearingwhere gearing=debt/(debt+equity)
186、.The cost of equity is estimated using the standard Capital Asset Pricing Model(CAPM)and is equal to the risk free rate plus a risk premium:Cost of equity=risk free rate+re-leveraged equity beta equity market risk premium with re-leveraged equity beta=(asset beta debt beta gearing)/(1 gearing).24Und
187、erstanding the pandemics impact on the aviation value chain Annex D:Companies included in the analysisAirlines The airlines studied in the analysis represent approximately 85%of the global airline sector revenue pool.To compute sector aggregates for ROIC and economic profit,the sample of airlines st
188、udied is scaled up using its proportion of regional sector revenues,and this is subsequently summed up to a global estimate.Companies included:EuropeNorth AmericaAsia PacificRest of WorldAegean AirlinesABX Air,Inc.Air AstanaAerolineas ArgentinasAer LingusAir CanadaAir ChinaAeromexicoAeroflotAir Tran
189、sport Services Group(ATSG)Air IndiaAir ArabiaAir Berlin(up to 2016)Alaska AirAir New ZealandAir Mauritius(up to 2018)Air EuropaAllegiant TravelAirAsiaAvianca HoldingsAir FranceAmerican AirlinesAirAsia IndiaAzulAir Italy(up to 2018)Atlas Air WorldwideAirAsia XComair LimitedAirBridgeCargoCargojet Airw
190、aysAll Nippon AirlinesCOPA HoldingsAlitalia(up to 2015)Delta AirlinesAsianaEgyptairAustrian AirlinesEvergreen International AirlinesBangkok airwaysEl Al Israel AirlinesBlue PanoramaFrontier Cathay PacificEmiratesBritish AirwaysHawaiianCebu PacificEthiopian AirlinesBrussels AirlinesJetblueChina Airli
191、nesEtihad(up to 2014)CargoluxKalitta AirChina EasternFlyDubaiCzech AirlinesMesa AirlinesChina Southern AirlinesGOL Linhas Aereas InteligentEasyjetPolar Air CargoEVA AirwaysInterjetFinnairRepublic AirwaysGaruda IndonesiaJazeera AirwaysFlybe(up to 2017)SkywestGo FirstKenya AirwaysIberiaSouthwest Airli
192、nesHainan airlinesKuwait AirwaysIcelandairSpirit AirlinesHong Kong AirlinesLATAMKLMUnited AirlinesIndigo(Interglobe aviation)MiddleEast AirlinesLOT Polish AirlinesUS AirwaysJapan AirlinesOman Air(up to 2017)LufthansaVirgin America(up to 2015)Jet Airways(up to 2017)Qatar AirwaysNorwegian Air ShuttleW
193、estjetJuneyaoRoyal Air Maroc(up to 2018)Pegasus AirlinesKorean AirlinesRoyal JordanianPrimera Air Scandinavia(up to 2017)Malaysian Airlines South African Airways(up to 2018)RyanairNok AirTunisair(up to 2017)S7 airlinesPakistan International AirlinesVivaAerobusScandinavian Airlines(SAS)Philippine Air
194、linesVolarisSwiss InternationalQantasTAP Air PortugalShandong AirlinesTurk Hava YollariShenzhen AirlinesVirgin Atlantic AirwaysSIA GroupVoloteaSichuan AirlinesVuelingSkymarkWizz AirSpicejetWOW Air(up to 2017)Spring AirlinesSri Lankan airlinesThai AirwaysVietjet AirVietnam AirlinesVirgin Blue/Virgin
195、AustraliaVistara25Understanding the pandemics impact on the aviation value chain Annex:Companies included in the analysisAirportsThe airports studied in the analysis represent between 30%and 40%of the global airport sector revenue pool.To compute sector aggregates for ROIC and economic profit,the sa
196、mple of airports studied is scaled up using its proportion of regional sector revenues,and this is subsequently summed up to a global estimate.Companies included:EuropeNorth AmericaAsia PacificRest of WorldAenaAtlantaAirports Corporation of VietnamACSAAroport de Beauvais-TillChicago MidwayAirports o
197、f ThailandAeropuerto de TocumenAroport de Bordeaux-MrignacChicago OHareAngkasa Pura IAeropuertos Argentina 2000(up to 2014)Aroport de Lyon-Saint-ExupryDallas Fort WorthAngkasa Pura IICorporacion America AirportsAroport de Nice-Cte dAzurDenverAuckland International AirportGrupo Aeroportuario del Cent
198、ro Norte(OMA)Aroport de Toulouse-BlagnacLas Vegas AirportBeijing Capital International AirportGrupo Aeroportuario del Pacfico(GAP)Aeroport Marseille ProvenceLos Angeles World AirportsChangiGrupo Aeroportuario del Sureste(ASUR)Aeroporti di RomaSan Francisco AirportChongqing Airport GroupGuayaquil Air
199、port(up to 2014)Aeroports de ParisTampaDelhiKenya Airports AuthorityBAA/Heathrow Airport HoldingsTorontoGuangzhou Baiyun International AirportONDAFlughafen WienHainan Meilan International Airport(Regal)Santiago de Chile(up to 2014)Flughafen Zrich(Unique)Hangzhou International AirportFraportHong Kong
200、 AirportKobenhavns LufthavneIncheonLondon GatwickJATCMalta International AirportMalaysia Airports HoldingsMunich airportMelbourne(APAC)SAVE(Venezia)(up to 2016)Mumbai(up to 2014)Schiphol Amsterdam AirportNanJing Lukou International AirportSheremetyevoNaritaTAV Havalimanlari HoldingShanghai Internati
201、onal Airport(Hongqiao)Toscana AeroportiShenzhen Airport Co.Sichuan Province Airport GroupSydney AirportXiamen International Airport Co.26Understanding the pandemics impact on the aviation value chain Annex:Companies included in the analysisANSPsThe ANSPs studied in the analysis represent approximate
202、ly USD 7 to 9 billion in revenue.To compute sector aggregates for ROIC and economic profit,the sample analyzed is scaled up using its proportion of estimated total sector revenue.Companies included:LessorsThe lessors studied in the analysis represent approximately 40%of estimated global lessor reven
203、ue.To compute sector aggregates for ROE and economic profit(based on the difference between ROE and Cost of Equity),the sample analyzed is scaled up using(a)its proportion of estimated total sector revenue and(b)its proportion of estimated total sector fleet value.Companies included:OEMsThe aircraft
204、 and engine OEMs studied in the analysis represent more than 90%of estimated global OEM revenue.To compute sector aggregates for ROIC and economic profit,the sample is scaled up using its proportion of estimated total sector revenue.Companies included:MROsThe MROs studied in the analysis represent b
205、etween 30%and 40%of estimated global MRO revenue.To compute sector aggregates for ROIC and economic profit,the sample is scaled up using its proportion of estimated total sector revenue.Companies included:Ground handlersThe ground handlers studied in the analysis represent approximately 25%of estima
206、ted global handling revenue.To compute sector aggregates for ROIC and economic profit,the sample is scaled up using its proportion of estimated total sector revenue.Companies included:AerothaiAir ServicesAirways Corporation of New ZealandATNSCAASDFS Deutsche FlugsicherungENAIREENAVGKOVD-State Federa
207、l Unitary Enterprise ATM corp.NATSNavCanadaAerCap HoldingsAir Lease CorporationAircastleAlafcoAviation Capital GroupAvolon(to 2014)AWAS(to 2016)BOC AviationBoeing Capital(up to 2012)China Aircraft Leasing CompanyDubai Aerospace EnterpriseFlyLeasingILFC(up to 2013)Intrepid Aviation(up to 2014)Nordic
208、Aviation CapitalWillis LeaseAirbus CommercialBoeing CommercialCOMACEmbraerPratt&WhitneySafranAAR CorpAirAsia TaiwanAMECOBBA AviationGAMECOHAECOLufthansa TechnikSIAECBangkok Aviation Fuel ServicesBBA AviationCelebi Hava ServisiDerichebourg/Penauille(up to 2012)DNATAGlobeGround Berlin(up to 2012)Heath
209、row Airport Fuel CompanyJohn MenziesKorea Airport Service CoSaigon Ground ServicesSATS(ground handling)Saudi Ground Services CompanyWorld Fuel Services Aviation27Understanding the pandemics impact on the aviation value chain Annex:Companies included in the analysisCaterersThe caterers studied in the
210、 analysis represent between 30%and 40%of estimated global caterer revenue.To compute sector aggregates for ROIC and economic profit,the sample is scaled up using its proportion of estimated total sector revenue.Companies included:GDSs Travel techThe GDSs/travel tech players studied in the analysis r
211、epresent more than 90%of estimated global GDS revenue.To compute sector aggregates for ROIC and economic profit,the sample is scaled up using its proportion of estimated total sector revenue.Companies included:Freight forwardersThe freight forwarders used in the analysis report a mixture of contract
212、 logistics and freight forwarding revenues,which in some cases has not been possible to split.Similar to other sectors,ROIC and economic profit for the sector has been estimated by scaling up estimates based on the sample,using the share of global sector revenue.Companies included:Do&CoGate GroupJou
213、rney Group(up to 2015)SATS(Catering)Saudi Airlines Catering CompanyServairAmadeus IT GroupSabre CorporationTravelportTravelskyAgility Public Warehousing CompanyDSV PanalpinaExpeditorsHellman Worldwide LogisticsKintetsu World ExpressKuehne&Nagel InternationalPanalpina(up to 2018)Uti Worldwide(up to 2014)