Widespread hopes that airlines have overcome the industry's historical boom-and-bust cycles is ill-considered and the current cycle of growth is "definitely" reaching its peak, says Avitas analyst Adam Pilarski.
"I think we have a two or three years until the next collapse. I wouldn't sleep well though, meaning [there is] a lot of danger out there," said Pilarski, senior vice-president at the Avitas advisory group, addressing Flightglobal.com's sister news service Commercial Aviation Media US Valuation Seminar in Washington DC this month.
For the last three years, airlines have seen a huge boom in air traffic and profitability, and order backlogs for new aircraft have swelled. "You have to look at cancellations," warns Pilarski. "Part of it is the Middle East. Some of the [orders from airlines] in the Middle East just doesn't make sense."
Pilarski believes that the industry's backlog versus fleet is "getting uncomfortable" and he predicts that the economic downturn will come but will be "a shorter duration".
Source: Flight International
