Germany - Civil Aerospace: Low airline profitability affecting aircraft delivery (Strategy, Performance and Risk Analysis)
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Despite a challenging environment within the EU, Germany continues to be one of the most dynamic economies in the world. It remains one of the most politically and economically influential countries in the EU.
The presence of innovative small and medium-sized enterprises (SMEs), also known as German Mittlestand, is a driver of the labor market. During the financial crisis of 2008-2009, Germany’s unemployment rate decreased, in direct contrast to all other eurozone countries. The Federal Office for Civil Aviation of Germany is the regulatory body responsible for framing guidelines for various aspects of civil aviation. It is responsible for protecting passenger rights and monitoring the air worthiness of airlines
An increase in disposable income will drive the number of passenger volumes
In Germany, passenger volumes increased at growth rate of 5.6%, from 118.1 million in 2015 to 124.7 million in 2016. It is forecast to post a CAGR of 2.8%, from 125.7 million in 2017 to 140.3 million in 2021. An increase in disposable income will support a preference for air travel. According to the European Central Bank, nominal disposable income per capita increased at 1.8% in 2016.
Aircraft deliveries along with equipment procurement to spur capital expenditure growth
Capital expenditure on aircraft stood at US$2.2 billion in 2016 and will post a CAGR of 10.7%, from US$2.5 billion in 2017 to US$3.7 billion in 2021. Aircraft deliveries will drive capital expenditure.
Leasing and used aircraft procurement to affect growth in new aircraft deliveries
In Germany, aircraft deliveries increased at an annual growth rate of 20.7%, from 29 aircraft in 2015 to 35 deliveries in 2016. Over the forecast period, it will post a CAGR of -9.2% CAGR, from 28 units in 2017 to 19 in 2021. This is due to a growth in number of used and lease aircraft as a part of cost reduction initiatives by airline operators.
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