1. To represent, lead and serve the airline industry Cyclical upturn and the bigger picture September 2010 Brian Pearce www.iata.org/economics

2. Markets rebound from Great Recession Source: IATA

3. World trade upturn boosts air cargo Source: IATA, Netherlands CPB

4. Freighter utilization peaking at high level Source: IATA

5. Business travel revives premium business Source: IATA, Haver

6. Fares turning up but so are fuel prices Source: IATA and Platts

7. Asset utilization not as good as it seems Source: IATA

8. Capacity starting to outpace demand Source: IATA

9. And there are big geographical differences Source: IATA

10. Reflected in mixed operational cash flows Source: Bloomberg

11. Some regions back in profit, some not Source: ICAO, IATA

12. Overall industry profits see cyclical upturn Source: ICAO, IATA

13. But significant structural gap remains Source: IATA

14. There are supply chain issues Source: IATA ‘Value Chain Profitability’

15. But majority of capital invested in airlines Source: IATA ‘Value Chain Profitability’

16. Returns inadequate for whole value chain Source: IATA ‘Value Chain Profitability’

17. US-EU 2 nd Stage could have opened path for $5bn benefit from liberalized O&C US-EU Open Skies liberalisation Open Skies only O&C liberalisation (incremental benefits) Passengers: +26m +15-40m Economic benefits: €6-12bn €4bn Jobs: +70,000 +1,800-10,000 Source: Booz Allen Hamilton study

18. M&A and JVs taking place but restructuring potential is limited Source: Bloomberg

19. Alliances active but share stable at best Air China, China Southern, COPA and others Swiss, SAA, Aeroflot Source: IATA

20. Exits exceeded by new entrants even in recession Source: Ascend

21. Substantial value is created…but captured by customers and wider economy Source: IATA