AB Global Research 8 August 2018 Analyser Equities Global Airlines Analyser – 2018/2019 Global Airlines Jarrod Castle, CFA Analyst @ +44-20-756 88883 Eric Lin Analyst eric-@ +852-3712 3640 Rogerio Araujo Analyst @ +55-11-3513 6595 Marcus Curley Analyst @ +64-9-913 4750 Simon Mitchell Analyst @ +61-2-9324 3573 Jun Harada Analyst @ +81-3-5208 6243 Dominic Edridge Analyst @ +44-20-756 88779 Celine Fornaro Analyst @ +44-20-7567 9351 estmentresearch This report has been prepared by UBS Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 94. UBS does and seeks to do business panies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Analysing airlines – the operator’s manual Section 1: VALUE supply … the residual value of the franchise, which could be above or below the hardware cost
top down a bottom up top down
a b c f c j We use the same analytical framework to produce all of our airline forecasts. While most forecast assumptions pany-specific, we make reference to central assumptions on new aircraft supply provided by our aerospace team, and jet fuel prices provided by our oil team (or the forward curve). mon framework also allows us to benchmark pany-specific assumptions effectively against the peer group; we have found this to be a more reliable basis for forecasting than consensus or historic trend. Section 4: THE NUMBERS
Key assumptions Change in overall capacity (ATK) Change in passenger traffic (RPK) Change in cargo traffic (CTK) Passenger load factor depends on... demand b bottom up Change in passenger yield Change in cargo yield Section 2: GROWTH Change in staff produc
