Morgan Stanley reviews global airline sector performance

Investing.com -- Morgan Stanley released a review of global airline sector conditions across major markets, showing mixed performance trends in different regions.

In the United States, an AlphaWise survey indicated travel intentions for the next six months declined to 58% from 64% in the previous update, though summer travel plans increased year-over-year. The survey found 44% of consumers plan to engage with the 2026 FIFA World Cup matches or related events in the U.S., with 4% planning to attend a match in person. TSA passenger data showed a roughly 2% year-over-year increase in May.

In Japan, ANA's fourth quarter results exceeded expectations due to temporary Middle East demand, while air cargo showed structural gains on firm pricing into the fiscal year ending March 2027. Inbound tourism weakened, with arrivals from Europe and the U.S. slowing and total arrivals turning negative. Morgan Stanley lowered its inbound demand outlook for 2026 to negative 8.0% year-over-year from positive 0.6% year-over-year due to fuel and geopolitical pressures.

Chinese airlines reported softer growth in April 2026 amid pricing inflation. SPA recorded 18% year-over-year revenue passenger kilometer growth in both domestic and international markets, with its passenger load factor reaching 92.7%. The Big Three carriers delivered domestic RPK growth ranging from negative 1% to positive 3% year-over-year, with CA outperforming on traffic and load factor improvement. International routes remained resilient with Big Three carriers recording RPK growth of 11% to 14% year-over-year.

European airline traffic growth slowed to 0.8% year-over-year in April, below the 6.3% long-term average, though load factors held at 85.4%. Ryanair and Wizz Air showed May passenger growth of 5.6% and 26.1% year-over-year respectively, while Norwegian and Finnair traffic improved to 2.6% and 6.2% year-over-year. Barclaycard travel spending growth slowed, with airline spending declining 12.9% year-over-year. North Atlantic capacity growth remains limited in the second and third quarters, with EU-North America schedules showing 0.9% and 0.1% year-over-year growth.

Latin American airline trends remained mixed, with Mexico seeing continued passenger and flight volume declines as carriers adjusted capacity amid fuel price volatility, while Brazil's traffic growth slowed for a second consecutive month despite stable load factors.

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