Last week I had a post here citing the downbeat factoid that airlines have been a crummy investment, what with having lost money cumulatively through their history. Well, my timing was contrarianly auspicious as The Economist weighs in this week with a piece saying that investor negativity is misplaced, and the industry is poised for a “massive boom”:
In fact, the airline industry is poised for an almost unprecedented boom, as a new generation of planes is combining with better business models and huge volume growth in new markets.
…But there is more to it than savage cost-cutting; traffic volumes are growing. International traffic has risen by 8.3% so far this year, compared with 2004. In America, total traffic is up by 5.4%; in Europe the rise is 6%. In Asia, IATA is forecasting continuing annual growth of 6.8% through to 2009: China and some east European countries will go on growing by around 10%.
But perhaps the most conclusive indication of brightening skies is the boom in aircraft orders that is stretching Boeing and Airbus production plants to the limit.