M&A Advisory
Professional Services Firm
Full Credential Description
The airline industry in Europe faced significant challenges exacerbated by the Covid-19 pandemic, which led to a drastic decline in demand and profitability. In 2020, global demand for air travel plummeted by 66%, while capacity decreased by 57%, resulting in an average industry load factor dropping from 80% to 54%. This overcapacity problem severely impacted profitability, with the aggregate industry-wide EBIT loss reaching $105 billion, contrasting sharply with the $43.2 billion in operating profits recorded in 2019. European airlines, in particular, struggled with a profitability issue that predated the pandemic, as evidenced by their average EBIT margin of just 4.8%, compared to 9.6% for North American carriers. To address these niche issues, the case study suggests that consolidation through mergers and acquisitions (M&A) could be a viable solution for European airlines. The fragmented nature of the European airline market, with several independent legacy airlines competing against three major conglomerates, has led to extreme competition that erodes margins and undermines profitability. By pursuing mergers, European airlines could achieve economies of scale, optimize their ca
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Professional advisory services and strategic guidance delivered