普华永道-全球运输与物流业并购交易报告-2021.02-37正式版-WN4

|19January2021Transportandlogisticsbarometer

Agenda

Highlights

Keyissuesfortheindustry

Passengertransport

Freighttransportandlogistics

Outlook

Appendix:M&Adealsinfigures,methodology,contacts

|19January2021Transportandlogisticsbarometer

Highlights

|19January2021Transportandlogisticsbarometer

Highlights

244

dealswereannouncedinthetransportandlogistics(T&L)industryin2020.M&Aactivityhasthuscaughtupsincetheweakfirsthalfoftheyear,andevensurpassedthelevelof2018.Totaldealvalue($84.3bn),though,hasdroppedby42%comparedtotheverystrongM&Ayearof2019.Despiteseriousimpactsofthepandemiconindividualsubsectors,dealactivityhasnotsignificantlyslumped.Overall,industrydynamicshavebeensurprisinglyrobustanddefiedtheseveredisruptionanduncertainty.

46%

ofalldealsinLogistics&Truckingrelatedtowarehousingoperationsandassets,includingtwocold-storagemegadealsintheUS.Retaillogistics,warehousingandparceldeliveryhavebeenthekeyareaofindustrydynamics.Courier,expressandparcel(CEP)servicesexperiencedarealboomduetoonlinetrade.

Vaccinedistribution

isthelitmustestforthe(pharmaandcoldchain)logisticsindustry.Withanestimated271millionvaccinedosestobedistributedmonthly,majorchallengesincludesecuringtransportandstoragecapacityandrefrigerationofthevaccines,continuoustraceability,protectionagainsttamperingandtheftand,finally,disposalofmedicalequipment.

H12020

1.0

ThepandemichasledtoanewlowinM&Avaluation,mainlydrivenbyastrongdeclineinpricesforpassenger-relatedtargets.Theoverallsalesmultiplefellto1.0,thelowestvaluesincethefinancialcrisis.

H22020

Passengertransport

continuestobethemost-affectedsectorduetotheCOVID-19containmentmeasures.Eveninour‘effectivevaccination’scenario,fullrecoveryisnotexpectedbefore2023/2024.Thenumberofdealsdroppedto67(from95in2019).Theaveragedealvalue,however,issignificantlyhigherthaninfreighttransport,indicatingthatevenlargepassengertransportcompaniessuchasairlinesarefacingfinancialconstraintsandneedfinancialaidfromgovernmentsorprivateinvestors.

H12021

2021

willbeanothertoughyearfortheT&Lindustry.Keychallengesforcompaniesincludestabilisingthebusiness,digitalisingcorelogisticsoperations,respondingsmartlytonewmobilityhabitsandsecuringthesupplyofvaccinesworldwide.Companiesneedtorepair,rethinkandreconfiguretheirorganisationsandbusinessmodels.

H22021

5.4%

istheprojectedincreaseofgrossvalueadded(GVA)intheEuropeanfreighttransportandlogisticsindustryin2021,accordingtoourscenarioanalysis(inscenario1,‘effectivevaccination’).Witha9.0%contractionin2020and4.0%growthin2022,thismayleadtofullrecoverytopre-crisislevelsbytheendof2022.Scenario2(‘ineffectivevaccination’)suggestsalowerrecoveryrateof3.9%in2021.

|19January2021Transportandlogisticsbarometer

Keyissuesfortheindustry

|19January2021Transportandlogisticsbarometer

ThetwosidesoftheT&Lindustry

TheCOVID-19pandemichasspreadrapidlyacrosstheglobe,creatinganunprecedentedsituationformorethanayear.Ithasnotonlyputmanylivesatrisk,buthasalsodisruptedtheglobaleconomyandhaschangedthewaypeopleworkandlive.Besidesahealthcrisis,COVID-19isaneconomiccrisisthatisaffectingboththedemandsideandthesupplyside,andmaydevelopintoafinancialcrisiswithcompaniesunabletorepaytheirdebts.Moreover,COVID-19hasseverelychallengedtheresilienceandabilityofcompaniestoensurebusinesscontinuity.

Thisglobalcrisisislikelytobeoneofthemostsevereeverrecorded,butitsimpactdiffersbyindustry.Therearesomethatappeartohaveonlybeenmarginallyaffectedorhaveevenprofitedfromthepandemic,suchasfood,healthcare,technologyandsoftware,ortelecommunications.However,mostotherindustrieshavesufferedsignificantslumps.Therefore,particularlyinEurope,governmentshavelaunchedshort-termfinancialsupportprogrammestolimittheeconomicdamageandstimulatedemandincertainsegments.

TheT&Lindustry–duetoitsnatureasadownstreamindustrydependentonotherindustries–mirrorsglobaleconomicactivity.However,two‘faces’canbeseen,asthedynamicsofthepandemichaveimpactedthesubsectorsofT&Ltovaryingdegrees.Freighttransportandlogisticshavebeencomparativelyrobustonaverage,yettherearemajordifferenceswithinitssubsectors.Passengertransport,incontrast,hassufferedhugedeclinesinallsubsectorsandispossiblyoneofthehardest-hitindustries.

Thisdichotomycan,insomecases,evenbeobservedwithinindividualdiversifiedlogisticscompanies,dependingonthedifferentsegmentstheyserve.Forcompaniesinthisposition,theopportunityhasarisentocushionlossesincurredinthepassengerbusinesswithrevenuesfromthefreightbusiness.

|19January2021Transportandlogisticsbarometer

Passengertransport

WiththepersistenceoftheCOVID-19pandemicandtheassociatednewlockdowns,travelrestrictionsandborderclosuresinsomecountries,thepassengertransportsectorisstillinsurvivalmode.Themeasurestakenledtoatotalcollapseindemandforpassengertransport,puttingmanycompaniesinthissectorunderoperationalpressureandinfinancialdistress.Alongsiderailandbuscompanies,airlines,airportsandtheentiretravelindustryhavebeenparticularlyaffected.Weexpecttoseeanongoing,structuralimpactduetochangedmobilityhabits.

Decliningnumbersofbusinessandleisuretravellersledtoverylowcapacityutilisationforrailandbuscompanies.Mostrailcompaniescontinuedtooperateasfaraspossibletomaintainmobility.AfterabriefincreaseindemandwiththetemporaryeasingofrestrictionsinQ3,passengernumbersfellagaintowardstheendoftheyearduetothesecondwaveofinfections,newrestrictionsandaccompanyingsafetyconcernsintheuseofpublictransport–particularlyinEurope.

Passengerairlineslargelysuspendedflightoperationsforseveralmonths.In2020,thenumberofflightsdroppedby58%to16.4million,andhencetoa1990slevel.1Thissituationledtomanyairlinesstrugglingtoavoidinsolvency,andforsome,governmentbailoutswereinevitable.

ThenumberofpassengersoncruiselinesstartedtodecreaseinMarch,leadingtodeparturesbeingsuspendedandanincreasednumberofanchoredcruiseshipsasthevirusspread,withdirecteffectsoncruiseterminalsaswell.

InEuropeandAsia,somecruiselinesreturnedtooperationwithreducedcapacityinQ3,butthenumbersofpassengersonboardhaveremainedlow.

Freighttransportandlogistics

Freighttransportandlogisticswasn’thitashardaspassengertransportandseemstoberecoveringfaster.Still,thepictureisrathermixed.Asanexample,automotivelogisticsservicescontractedsignificantlyupstreamanddownstream,includingsupplytoproductionplants,transhipmentterminals,anddistributionviaroadorrail.

Aircargovolumescollapsedduetolackofbellyfreightcapacity.Maritimeshippingwasimpactedbythecontractionofcargovolumesandiscurrentlyfacingcontainershortages.Incontrast,logisticsservicesforindustriessuchasfoodandhealthcarewereabletogrow,whileCEPcompaniesexperiencedanall-timehighfollowingrecordsalesinonlinetrade.

Afterborderclosuresandfactoryclosuresinsomemanufacturingindustriestemporarilydisruptedsupplychains,therecoveryofsomeeconomicindicatorsgivescauseforoptimism.

TheWTOGoodsTradeBarometerreleasedon

20November2020pointstoarecoveryoftradeinthethirdquarteroftheyear,drivenbyanincreaseinexportorders.Thebarometercurrentlystandsat100.7,muchhigherthanthe87.6recordedinMay.TheRWI/ISLContainerThrough-putIndex,whichrosetoanall-timehighof122.6inOctober,droppedslightlyinNovember.2ThroughputdecreasedinChineseportsinparticular.

ThetrucktollmileageindexforGermanyalsorecoveredtoitspre-COVIDlevel,andtheexpressandsmallparcelmarketisrecordingthehighestgrowthrategloballysince2010.3

Worldtradeseemstohavelargelyrecoveredfromitsslumpinthespring,drivenbythere-openingofproductionplants,significantriseofe-commerceandthequickeconomicrecoveryinChina.

Nevertheless,uncertaintyremainshighandthesecondwaveofCOVID-19infectionsandthecurrentspreadofCOVID-19mutationscouldputtradeunderpressureagain.Itremainstobeseenwhetherpredictionsaboutnormalisationwillprovetobecorrect.Atthesametime,freightforwarders,carriersandcontractlogisticsprovidersstillfacetherisksofcustomersdefaultingandoperationalobstacles.

Source:IATA–InternationalAirTransportAssociation|IndustryStatistics|November2020

Source:RWI–LeibnizInstituteforEconomicResearch

Source:TransportIntelligence

|19January2021Transportandlogisticsbarometer

Differenceindefaultrisk

LookingatthedevelopmentofCDS(creditdefaultswap)spreads,investors’

Quarterlyrevenuesincludinganalystestimates(2019average=100)

ThesplitintheT&Lindustrybecomesapparentthroughouranalysisofactualandexpectedquarterlyrevenuedevelopmentofmorethan200listedT&Lcompaniesin2020.Itcanbeobservedthatboththepassenger-relatedsubsectorsandthefreight-relatedsubsectorswerebelowthe2019averagethroughout2020,withtheexceptionofLogistics&TruckinginQ4.

However,passenger-relatedoperationsexperiencedmoresignificantdeclines,andquarterlyrevenueswereinsomecases(e.g.airlines)upto80%lowerthanthe2019average.RecoverystartedinQ2,butataslowpace,sothatpre-crisislevelsarenotexpectedtobereachedin2021.

Thefreight-relatedsubsectorshavebeenlessaffectedincomparison:theirquarterlyrevenueswereoftennomorethan20%belowthe2019averageandareexpectedtofurtherapproachpre-crisislevelsinthecomingmonths.FreighttransporthasprofitedfromsupplychainsstartingtostabiliseinQ32020andtheassociatedincreaseindemandasenterprisesstartedrestockingtheirinventoriesandconsumersstimulatede-commercebyincreasinglyshiftingtheirconsumptiontotheinternet.

perceivedriskofdefaultwashighestinallsubsectorsoftheT&Lindustryinthesecondquarter.Sincethen,thesituationhaseasedsomewhat,andthedefaultriskrecognisedattheendoftheyearisinsomecasesevenlowerthanpre-crisislevels,inbothpassengertransportandfreighttransport.

Onlyairlinesstandoutfromothersub-sectors,withamedian5-yearCDSspreadinearlyOctobersixtimeshigherthanthe2019average.Thefurtherincreasethroughouttheyearisaresultofthealmostcompletehaltinairtrafficandtheassociatedworseningsituationatairlines.Itappearsthatinvestorsnolongertrustmostairlines’abilitiestoservicetheirdebtsonthecapitalmarket.TheCDSspreadsituationforairlinesimprovedslightlyinthelasttwomonthsoftheyear,butthelevelofuncertaintyisstillmuchhigherthanintherestoftheindustry.

However,thedefaultrisk,whichwasperceivedoverallasaverage,encouragedinvestorstoenterintoM&Adealsdespitetheseverelossesinrevenueinsomesubsectors.

120

100

80

60

40

20

0

20191Q202Q203Q204Q201Q212Q213Q214Q21Source:PwCanalysisbasedonS&PGlobalCapitalIQ

Median5-yearCDSspread(2019average=100)

650

550

450

350

250

150

50

Infrastructure(Airport)

Infrastructure(Port)

Infrastructure(Road)

Logistics&Trucking

PassengerAir

PassengerGround

Rail

Shipping

Infrastructure(Airport)

Infrastructure(Port)

Infrastructure(Road)

Logistics&Trucking

PassengerAir

Rail

Shipping

Source:PwCanalysisbasedonS&PGlobalCapitalIQ

|19January2021Transportandlogisticsbarometer

Dealactivitysurpasses2018level

SincetheT&Lindustry’ssubsectorsarebeingaffecteddifferentlybytheCOVID-19pandemic,theassociateduncertaintyhasledtoslightlyweakerM&Aactivityoverallcomparedto2019.However,contrarytoexpectations,thenumberofdealsinT&Lhasnotplummeted.Atotalof244dealsworthatleast$50millionwereannouncedin2020,comparedtoa5-yearaverageof250dealsperyear,implyingthatinvestorsarestillenteringintoacquisitions,buttheyarefocusingonsmallertransactionswithlessriskintermsofvalue.Thisisreflectedinthetotaldealvalue($84.3billion)andaveragedealvalue($345.6million),whichshrankby30%and28%respectivelyin2020comparedtothe5-yearaverage.

Similarly,fewermegadeals(17)wereannouncedfor2020(2019:21),whichalsohadamuchlowerdealvaluethantheyearbefore.Onlyonemegadealreachedthe$4billionmark,whilein2019,theexceptionalBlackstonedeal(USlogisticsassets,$18.7billion)andothermajordealsdroveupthetotaldealvalue.

Thebiggestdealannouncedin2020isinpassengertransport;morespecifically,theaviationindustry.BlackstoneagreedtoacquireSignatureAviationPLC,aLondon-basedproviderofairtransportationsupportservicesfortheglobalbusinessandgeneralaviationmarket,foratotalof$4.29billion.Thisisoneexampleofanairlinesandairportsdeal;dealsinthissubsectormadeupapproximately40%ofthe67totalmergersandacquisitionsinthepassengertransportsegment.Theshareofannouncementsinvolvingairlinesandairportsisthusstable,buttherationaleofmanytransactionshasshiftedtowardscostreductionorshort-termliquidity.

TargetsinLogistics&Truckingandinfrastructureassetsseemtobeappealing,withtenmegadealsannouncedintotal.Infreighttransport,thelargesttransactionannouncedinvolvedportinfrastructure:DalianPortCoLtdagreedtomergewithYingkouPortLiabilityCoLtd,aYingkou-basedproviderofmarinecargohandlingservices,throughastockswaptransactionvaluedat$2.84billion.Besidesthis,thefreightsegmentwitnessedatotalof177dealannouncements,which,asinpreviousyears,weredominatedbyahighnumberofdealsinLogistics&Trucking.OftheseLogistics&Truckingdeals,46%relatetoware-housingoperationsandassets,reflectingthekeyroleofretaillogistics,warehousingandparceldeliveryinindustrydynamics.

2015

2016

2017

2018

2019

2020

Total

Total

1H17

2H17

Total

1H18

2H18

Total

1H19

2H19

Total

1H20

2H20

Total

Numberofdeals

239

237

146

137

283

127

100

227

138

123

261

103

141

244

Totaldealvalue

183.8

119.9

62.9

71.3

134.2

74.6

41.6

116.2

68.4

76.7

145.1

36.7

47.6

84.3

($bn)

Averagedeal

769.2

506.1

430.7

520.4

474.1

587.1

416.5

511.9

495.5

623.5

556.0

356.7

337.5

345.6

value($m)

Source:PwCanalysisbasedonRefinitiv

|19January2021Transportandlogisticsbarometer

T&LdealsdefyGDPdevelopment

Basedonhistoricaldata,wehaveidentifiedacorrelationbetweenglobalGDPandM&AactivityintheT&Lindustryintermsofnumberofdeals.However,thiscorrelationdidnotprovetruein2020,becausealthoughrealGDPin2020recordedanevensharperdeclinethanduringthefinancialcrisisin2008/09,thenumberofT&Ldealsannouncedonlyfellslightlycomparedto2019.

Theyear2020startedwithanegativerealGDPgrowthrateof–2.6%,butafterthesteepdropinQ2to–8.6%ithasrecoveredsomewhatoverthecourseoftheyeartostandat3.4%year-on-yearinQ4.T&Ldealannouncementsalsofellslightlyinthefirsthalfoftheyear,butreturnedto2019levelsbythethirdquarter.

ItseemsthatthecrisishasnothadmuchofanegativeimpactonM&AdealactivityintheT&Lindustryandthatthebottomhasbeenpassed.Theindustryhasbenefittedfromthealreadyhighlevelofdrypowder,whichhasrisenfurtherafterabrieflullinthesummermonths,leadingtoabacklogsituationandencouraginginvestorstoengageinmergersandacquisitions.

Incontrast,strategicalliancesdonotrevealsuchconsistency.Whiletheirnumberhassteadilydecreasedsince2007,anewlowwasreachedin2020,farbelowthelevelduringthefinancialcrisis,whenthenumberofstrategicallianceswasratherhigh.Inthefirstquarterof2020,strategicallianceswerestillatthelevelofthepreviousyearandthenfellsignificantlywiththeincreasingimpactofthecrisis.Thisispartlybecausecodeshareagreementsaccountedforaconsiderableshareofstrategicalliancesinpreviousyearsandhavenowalmostcompletelydisappearedduetothecollapseofaviation.However,jointventuresandotherformsofcollaborationarealsoattheirlowestpointinthepast15years.

Thereasonsbehindthismaybeongoinguncertaintyandsomecompanies–especiallypassenger-servingcompanies–stillstrugglingtosurvive,puttingalltheireffortsintostabilisation,liquidityandrestructuring.

T&Ldealsperyear

(no.ofdealsandchangeinrealglobalGDP)

300

10

250

5

200

150

0

100

-5

50

0

-10

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Numberofdeals

GlobalGDP(real),USD,%changeonpreviousyear

Source:PwCanalysisbasedonRefinitivandIHS

T&Lstrategicalliancesperyear

(no.ofannouncementsandchangeinrealglobalGDP)

500

10

400

5

300

0

200

100

-5

0

-10

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Codeshareagreement

Jointventure

Othercollaboration

GlobalGDP(real),USD,

%changeonpreviousyear

Source:PwCanalysisbasedonS&PGlobalCapitalIQandIHS

|19January2021Transportandlogisticsbarometer

Passengervs.freight:ondifferenttracks

Historically,theratiooffreight-relatedtargetstopassengers-relatedtargetswas,onaverage,about60/40–bothintermsofnumberofdealsandintermsoftotaldealvalue.In2020,ashifttowardsfreightcanbeobservedinthetotaldealnumber,reflectingthedifferentextenttowhichthetwosectorswereaffectedbythecrisis.Whilethefreighttransportandlogisticssectorsawan11%increase,29%fewerdealswereannouncedinthepassengertransportsector,whichledtotheoveralldecreaseinthetotalnumberofdealscomparedto2019.

ItappearsthattheCOVID-19crisishasresultedinpassenger-relatedtargetsbeinglessattractiveforinvestorsduetothehighlydeterioratedmarketandcorrespondinguncertainty,whichhasincreasedriskaversionandsubduedwillingnesstostrikesuchdeals.

However,althoughtherewerefewerdealsannouncedwithpassenger-relatedtargets,thesetendedtobethelargerdeals.Theaveragedealvalue,whichinthepastwasusuallysimilarforbothtypesoftargets,isnowabout1.5timeshigherforpassenger-relatedtransactionsthanforfreight-relateddeals.Thecrisishasputeventhelargerpassengertransportcompanies–suchasairlines–intodistress,causingthemtoneedfinancialaidfromgovernmentsorprivateinvestorsandthusfavouringdeals.

ThepandemichasledtoanewlowinM&Avaluation,withthemedianvalue/salesmultipleforT&Ltargetsdecreasingto1.0,farbelowthe10-yearaverageof1.8.Thisismainlybeingdrivenbyastrongdeclineinpricesforpassenger-relatedtargets,from1.3to0.7in2020.

Thepricesforfreight-relatedtargets,incontrast,havenotchanged.Itmustbetakenintoaccountthatthemultiplesarecalculatedonthebasisofpreviousyear’srevenues,whileinvestorsvaluetheirtargetsaccordingtorevenueexpectationsforthecomingyears,whicharelikelytobesignificantlybelow2019levelsinthepassengertransportsector.

T&Ldealsperyear(no.ofdeals)

100%

80%

60%

40%

20%

0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Freight-relatedtarget

Passenger-relatedtarget

Freightvs.passenger(long-termaverage)

Source:PwCanalysisbasedonRefinitivandIHS

T&Ldealsperyear(totaldealvalue)

100%

80%

60%

40%

20%

0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Freight-relatedtarget

Passenger-relatedtarget

Freightvs.passenger(long-termaverage)

Source:PwCanalysisbasedonS&PGlobalCapitalIQandIHS

|19January2021Transportandlogisticsbarometer

Passengertransport

|19January2021Transportandlogisticsbarometer

Deepdive:ashakyyearforairtransport

TheCOVID-19pandemichasbeenthedefiningtopicofthepastyearandwillmostlikelycontinuetobeforatleastthecomingyear.ThefailuretocontrolthespreadofthevirusledtosecondorthirdwavesofCOVID-19,hamperingairtravelrecoveryinmanymarketsinH22020.

Acrosstravelsegments,airlinessufferedmostsignificantly,alongsidetouroperators,sharedapartmentprovidersandcruiselines.TNMTanalysisshowsthatthenumberofcommercialairlineticketssoldsinceAprilhasconstantlylainmorethan90%belowthelevelofthepreviousyear.1

Indetail,worldwidepassengernumbersfell60%to1.8billion,from4.5billionin2019.Revenuepassengerkilometres(RPK)weredownbyover66%.2Thenumberofpassengerstravelledlastyearisthelowestinover16years.Globalpassengerloadfactor(PLF)fellto65.5%onaverage.3Interestingly,andincontrasttointernationaltravel,averydifferentpicturewasvisibleacrossdomesticairtransportmarkets:whereasNorthAmericaandEuropearestillsufferingheavily,domesticairtravelinChinaandRussiabegantorecoverearly,andcatchuptopre-crisislevelstowardsQ42020.

Theaircargosegment,ontheotherhand,hasfallenlittleafteraninitialdipandshowedstrongperformancetowardstheendoftheyear.Duetoaslighteconomicreboundfollowingthelockdownperiod,cargotonne-kilometres(CTK)weredownbyjust12%.4Asaircargotrafficremainsessentialforglobalsupplychains,theprevailingchallengeremainsthe(belly)capacityshortage.

Airportsharmedbydependenceonairtraffic

Thebusinesssituationofairportsiscloselylinkedtothepassengervolumeofairlines.Airportsinternationallyhavebeenaffectedbyadramaticdeclineinpassengernumbers,puttingthemindistress.EuropeandtheMiddleEastareprojectedtobethehardesthit,withdeclinesofmorethan70%comparedtothepredictedbaselinein2020.5

Inlinewithairlines,passengernumbersfellsignificantlyinApril.Thesituationseemedtoeaseduringsummer,butfromtheautumnonwardsthenumberofpassengersdecreasedagaininthewakeofthedeterioratingsituationofthepandemic.Inaddition,newrestrictionsaffectingairtravelwereimposedinDecemberwiththeemergenceofthefirstmutationsofthevirus.Forexample,over40countriesinEurope,Asia,SouthAmerica,theCaribbeanandMiddleEasthavesuspendedalltravellinkstoandfromtheUK.Whilesomecountriesimposedtheflightbanonlytemporarily,others–likeGermanyorIndia–haveextendedituntilatleasttheendofJanuary.

Throughouttheyear,thecargobusinesshastosomeextentservedasastabiliseratsomeairports,buttheunprecedentedsituationledtoanoveralllossof$112billion(65%)ofairportrevenuescomparedtopre-crisisestimates.6Thiscorrespondstoanegativeimpactontheliquidityofairportoperatorsandwillrequireextensiverestructuringandrecapitalisationmeasures.Inadditiontoequitycontributionsfrom(public)shareholders,bankloansarebeingtakenoutorbondsissued.

1Source:TNMT–Travel&MobilityTech

2Source:IATA|AnnualReview2020

3Source:IATA|EconomicPerformanceoftheairline

industry|November2020

4Source:IATA|Aircargomarketanalysis|November2020

5Source:AirportCouncilInternational(ACI)World|The

impactofCOVID-19ontheairportbusiness|December2020

6Source:ibid.

|19January2021Transportandlogisticsbarometer

Developmentofpassengertraffic(billionpassengers)

–60%

4.7

4.4

4.5

3.6

3.8

4.1

3.3

3.1

2.9

3.0

2.8

2.1

2.3

2.5

2.5

2.5

2.7

2.0

1.8

04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20F* 2021F**

Source:IATADecember2020;*forecastbeforeCOVID-19;**forecastwithCOVID-19

DevelopmentofglobalGDPandRPK/CTK(2014=100%)

140%

120%

100%

80%

60%

40%

2014

2015

2016

2017

2018

2019

2020

2021F

Revenuepassengerkilometres(RPK)

Cargotonne-kilometres(CTK)

GlobalGDP(real)

Sources:IATA,IMF,WorldBank,PwCanalysis

ThemostsignificantdeclineinairtravelsinceWorldWar2

Fromaneconomicperspective,2020hasbeenthemostdevastatingyearinairtransporthistorysinceWW2,withCOVID-19causingatotalnetlosstotheairlineindustryofalmost$119billion.1

DespitesometravelrestrictionsbeingliftedinQ32020,awidespreadreboundineconomicactivityhasnotyetoccurred:airlines’profitabilityremainsnegativeinallregions,butslightlyimprovedcomparedtothelockdownperiodofQ2.NorthAmericaisexpectedtoreportthelargestnetlossin2020($45.8bn),whileAsia&Pacificwasabletomakesomerecoveryinlargedomesticmarkets,reducingitslossestoanestimated$31.7billion.2

IATAestimatesthataround43millionjobsareatriskfromthedramaticfallindemandfortravel.3Mainlyforthisreason,airlinesarebeingsupportedbygovernmentsintheformofequityinvestments,state-backedloans,taxconcessionsorwagesubsidies,