Mexico's Leading Economic Index (LEI) increased 0.1% in Jun-2010, with the behaviour of the composite indexes "still suggest[ing] that economic activity is likely to continue recovering, but at a slower pace in the near term", according to The Conference Board. [more]
Mexican economic recovery to continue, but at a slowing pace
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Aeromexico takes a bold stand against Donald Trump as its JV with Delta hangs in the balance
Airlines have largely been mute about the rise of the presumptive US Republican presidential nominee Donald Trump and some of his outlandish proposals, including the proposed wall to be erected on the US-Mexico border, which he believes Mexico – the US’ largest trading partner in Latin America – should pay for.
But Mexico’s largest airline Aeromexico has drawn a line in the sand with a new ad that subtly takes aim at Mr Trump’s proposal. It is a commendable move for Aeromexico, which is attempting to establish a strategic cross-border joint venture with its SkyTeam partner Delta Air Lines, just as Mr Trump proposes to erect borders.
The message of tolerance and of borderless air travel featured in the ad is against a backdrop of the ever-growing US-Mexico air travel market, which is strategic for US and Mexican airlines alike. More than anything, Aeromexico has to make moves to preserve business in one of its most lucrative and strategic markets.
CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.