European airlines: travel restrictions threaten summer peak cash flow

Both capacity and traffic data show the impact of changes in travel restrictions in Europe. Most recently, the expansion and contraction of the UK's green list - specifically the addition and then removal of Portugal - is clearly visible in capacity data.

Seat capacity in Europe is 59.5% below 2019 in the week commencing 7-Jun-2021, almost the same as the previous week after six weeks of a clear improvement. Europe remains below the other regions on this metric.

Middle East seat capacity is down by 54.4% versus 2019, Africa is down by 48.8%, Asia Pacific by 41.3%, Latin America by 36.8%, and North America by 27.3%.

Weekly passenger data from ACI Europe are only available up to the final week of May-2021. Nevertheless, this week's capacity data - coinciding with Portugal's removal from the UK green list - suggest that the previously improving trend of passenger data will also pause, or even reverse.

Moreover, Europe's airlines suffered the most negative cash flows in 1Q2021 (source: IATA). There is a real risk that this underperformance will continue into the European summer peak if travel restrictions do not relax.