When you examine the economy, after you believe your income or job is safe, you look for areas of the economy which need to be doing well and then you are convinced something has changed for the better. One of the major economic drivers in many cities is the airport, both business and passenger traffic. The higher the capacity or volume of people the more the economic activity from the travelers and the well being of the airport. Generations ago, the economic activity went around the railway station, now it is the airport. If the airport you would typically fly from is doing well, then you can easily believe the economy is doing better.

All industries have conferences and in 2020, most were virtual but they were still held. In an article by Nicolas Van Praet the Chief Executive of Airbus Guillaume Faury spoke to the International Economic Forum of the Americas, virtually. His company is the competition to Boeing, he said 2021 is shaping to be a chaotic year for the global aviation industry but he sees hope. The expectation if you compare the end of 2021 to the end of 2020, they will be a much different situation.

In every industry, they like order or predictability to know what to expect, Mr. Faury said an orderly return to air travel for passengers is the priority for Airbus and its customers. In 2020, we have seen a very disorderly process, which countries are open and which ones are not.

At the moment there are no widespread harmonization of the rules, it is patchwork.

For Airbus, 2020 has been a difficult year, it cuts its production rates by 1/3 in April, cut its workforce by 17% and it October it hopes to return to breakeven on a cash flow basis in the last 3 months of 2020.

Airbus’s customers are the world’s airlines and they have not cancelled airplanes just asked to defer them

Two big costs for airlines is fuel and financing, both have been low for the past year which has allowed airline customers to purchase more fuel and cut borrowing costs. Thankfully many governments have offered support to the airlines.

Linking to dividend paying stocks, ever since the Wright Brothers flew the plane, people have been interested in plane travel. With COVID the mixing of people has been a limiting factor which has hurt the airline industry including the 2 big manufacturers – Boeing and Airbus. We all look for something or guideposts to tell us whether an industry is doing well or not. The health of a middle income economy has been the airport, do you have guidelines for your investments?

There are more questions than answers, till the next time – to raising questions.