Europe airline outlook 2019: the haves vs the have-nots

Consolidation will probably continue to be a theme for Europe's airlines in 2019, albeit in a landscape that is consolidating only very slowly. The biggest live consolidation stories are Norwegian, Alitalia and Flybe, but none has a high seat share to/from/in Europe: Norwegian has 3.1%, Alitalia has 1.9% and Flybe has 0.9% (source: OAG, week of 12-Dec-2018). Whether these airlines are sold or not, overall market structure will not alter dramatically.

At the individual airline group level, Lufthansa Group could have an acquisition-free year, while IAG may be ready to look for another deal. Air France-KLM's priority will be labour relations at Air France. Ryanair and easyJet are unlikely to prioritise acquisitions.

Brexit will also be an important theme in 2019, even if only because the implications for aviation will start to become clearer. There is optimism that market access will continue as much as possible, but the potential for disruption cannot be discounted entirely.

A further key question for 2019 will be the balance between supply and demand growth. After some years of improving load factor, this may be hard to repeat in 2019.

Although the outlook for Europe's airlines remains generally healthy, 2019 may witness further disparity between the weak and the strong.