Overcoming Financial Turbulence with Numarqe: Cash Flow Management and Global Payment Solutions for Airlines

The airline industry's post-pandemic recovery is like a turbulent flight – full of ups and downs. Numarqe is the co-pilot airlines need, offering an embedded credit platform that's as reliable as an experienced flight crew and as refreshing as a complimentary mimosa at 30,000 feet. Discover a new era of financial agility today.

In times of economic volatility, constants are essential for predicting future growth and informing strategic decisions. The airline industry, marked by cycles of volatility and exogenous shocks, exemplifies this need. The COVID-19 pandemic, the deepest recessionary shock in modern history, has necessitated a reevaluation of established forecasting models for a post-pandemic world.

Historically, aviation economists have identified a standard economic cycle of two to three boom years followed by several years of downturn. However, the prolonged growth period from 2004 to the onset of the pandemic disrupted this cycle. Despite the global financial crisis of 2008/9, air travel continued to expand, driven by low interest rates and a surge in liquidity from investors seeking higher yields. This growth decoupled from global GDP, with the airline industry growing at more than 5% annually between 1990 and 2010, outpacing global GDP growth.

The pandemic caused a significant drop in growth, creating approximately $300 billion of "missing demand" from 2020 to 2022. A phenomenon known as "revenge travel" has driven rapid growth over the past two years, but the industry is only now returning to trend, with healthy demand expected to continue. Revenues for the airlines can continue to be on track to surpass the historic 1% of GDP revenue, driven by pent-up demand and flexible working habits.

Globally, air travel growth is projected to align with GDP growth, with net profits expected to remain elevated due to capacity constraints, pilot shortages, and higher inflation. The International Air Transport Association (IATA) reported that total airline revenue in 2023 recovered to 107% of pre-pandemic levels, with passenger revenue reaching $642 billion. IATA forecasts airline net profits to reach $25.7 billion in 2024, with a 2.7% net profit margin.

However, the recovery is uneven, with Asia, particularly China, lagging. Airlines face significant challenges, including higher debt burdens, rising costs, and capacity restrictions. The cost environment, driven by increased labour, maintenance, and fuel costs, poses a significant challenge to profitability. Interest rates have stabilised around 4-5% in the US and Europe, with inflation beginning to fall.

Manufacturing issues, particularly with the Boeing 737 MAX and Pratt & Whitney's Geared Turbofan engines, have compounded supply chain delays, pushing capacity constraints into 2025 or beyond. These issues, along with geopolitical tensions and upcoming elections in major economies, add to the industry's uncertainty.

Despite these challenges, the industry has shown remarkable resilience. Airlines have adapted, reducing debt and smoothing out maturities. Investor sentiment remains cautious, with concerns about rising costs and the stability of demand. However, the structural trend of increasing air travel persists, driven by a global desire to travel.

European Consolidation

European airlines have recovered well following the pandemic and are already back to profit. IATA reported European airlines posted a record net profit of $7.7 billion for 2023, with a forecasted $7.9 billion net profit for 2024. Passenger revenue growth is expected to slow to 10% in 2024 from 22% in 2023, indicating normalisation from a high base of 102% in 2022.

All airlines, including legacy carriers, benefit from sustained air travel demand, especially for premium services. Lufthansa Group posted a strong 2023, achieving €35.4 billion in revenue and an operating profit of €2.7 billion, driven by high demand for leisure travel, particularly in the premium segment. Air France-KLM also recorded €30.0 billion in revenue with profits at €934 million in 2023, attributing success to increased load factors and yields on various routes.

IAG, the parent company of British Airways, Aer Lingus, Vueling, Iberia, and Level, reported a revenue of €29.5 billion and a profit of €3.5 billion for 2023, with strong leisure demand across all airlines. British Airways has invested in its fleet, premium cabins and digital transformation expecting premium capacity to rise above 2019 levels by 2025.

European low-cost carriers have also been profitable. Ryanair reported strong results for the financial year 2023, with profits after tax up to €1.43 billion, driven by high traffic and load factors. However, Ryanair faces rising costs and Boeing delivery delays, impacting its growth plans.

Airline consolidation in Europe is accelerating. Lufthansa announced an agreement to acquire a 41% stake in ITA Airways, while Air France-KLM acquired a 20% stake in SAS Scandinavian Airlines. IAG is also progressing with its purchase of Air Europa. This consolidation trend may lead to a market dominated by a few large airline groups, similar to North America, with Ryanair leading the low-fare market. However, manufacturing issues and geopolitical tensions may elongate this consolidation timeframe.

The Post-Pandemic Paradox: High Demand, High Risk

While passengers are flocking back to the skies, the financial scars of the pandemic linger. Airlines are grappling with higher debt burdens, rising fuel and labour costs, and ongoing supply chain disruptions. Traditional lenders remain cautious, perceiving the industry as high-risk due to its vulnerability to external shocks. This has led to constrained access to credit, hindering airlines' ability to capitalise on surging demand.

Numarqe: The Financial Co-Pilot for Airlines

Numarqe's innovative embedded credit platform gives airlines the financial agility and insights to navigate this complex terrain. Here's how Numarqe is transforming the airline industry with features that elevate airline finances:

Financial Efficiency, From Takeoff to Landing

  • Conquering Cash Flow Volatility
    Numarqe's real-time insight provides a window into global spending. This enables proactive cash flow management, allowing airlines to anticipate fluctuations, allocate resources strategically and cushion any short-term shocks.
  • Streamlining Global Operations
    With multi-currency accounts, reducing the need to exchange currency, and seamless integrations with accounting software, Numarqe simplifies international payments and cross-border transactions, reducing costs and minimising administrative overhead.
  • Data-Driven Decision-Making
    Numarqe's AI-powered analytics engine goes beyond basic reporting, uncovering hidden patterns and insights within an airline's spending data. This empowers decision-makers to optimise budgets, identify cost-saving opportunities, and make informed strategic choices.
  • Flexible Credit Solutions
    Numarqe's AI-driven credit assessments give airlines access to tailored credit lines that adapt to their unique working capital needs and growth trajectories. This ensures that airlines have the financial flexibility to seize opportunities, invest in innovation, and weather unexpected challenges.
  • Operational Efficiency
    By automating tedious tasks like expense reporting and invoice processing, Numarqe frees up valuable time for finance teams to focus on higher-value activities that drive business growth.
  • Supplier Financing Made Easy
    Manage all your payable financing needs with Numarqe's dedicated module. Streamline vendor payments with extended terms and improve cash flow visibility.
  • Accounting Integration Bliss
    Seamlessly integrate with your existing accounting software or leverage Numarqe's comprehensive exporting capabilities. Say goodbye to manual reconciliation and hello to accurate, up-to-the-minute financial reporting in the way you need it.
  • Administrative Quicksand, Eliminated
    Numarqe rescues your finance team from the endless cycle of expense reports and reimbursements. Automated expense tracking, digital receipts with VAT capture, and customisable workflows mean less admin time and more time on strategic initiatives.
  • Financial Foul Play, Grounded
    Eliminate the risk of errors and fraud associated with manual expense reporting. Numarqe's centralised platform ensures transparency, accountability, and compliance with spending policies.
  • Employee Satisfaction Takes Flight
    No more out-of-pocket expenses or reimbursement delays. Numarqe keeps your teams happy and focused on their core responsibilities, not chasing down receipts.

Streamlined Spending, Elevated Control

  • Virtual & Physical Cards on Autopilot
    Issue virtual and physical credit cards to employees instantly. No additional paperwork is required. Easily set spending limits and restrictions by role or department, ensuring budget adherence and minimising the risk of overspending.
  • Roster Integration for Ultimate Security
    Seamlessly integrate with your existing crew scheduling system to automatically freeze/unfreeze virtual cards based on duty status. This means no more worries about off-duty expenses or unauthorised spending. Employee offboarding-no problem, simply destroy the credit cards remotely.
  • Credit Lines That Soar
    Numarqe's AI-powered underwriting doesn't punish airlines for operating in a volatile industry. Access credit lines up to 10x higher than traditional lenders, tailored to your financial health and growth trajectory.
  • Big Purchases, No Problem
    Need to make a large one-off payment for aircraft maintenance or a bulk fuel purchase? Numarqe can adjust single transaction limits on request, providing flexibility when you need it most.
  • Co-Branded Cards
    Reinforce your brand identity and incentivise employee engagement with co-branded Numarqe cards, a powerful internal and external marketing tool.

Real-World Impact: Numarqe in Action

Numarqe isn't just about managing expenses; it's about transforming your entire financial ecosystem. With Numarqe as your co-pilot, you gain the power to navigate industry volatility, optimise spending, and unlock new growth opportunities. It's time to leave the turbulence behind and soar to new heights.

Join us on this exciting journey as we redefine the financial landscape for the travel industry. With Numarqe, your growth ambitions are not just dreams but achievable realities. Let’s embark on this adventure together and turn the tides in your favour.

Welcome aboard! Click here to book a demo

2024 Numarqe Limited, All rights reserved. Numarqe Limited is registered under company registration number 12587141, 47 Red Lion Street, London, England, WC1R 4PF. Numarqe Capital Limited is registered under company registration number 13726764, 47 Red Lion Street, London, England, WC1R 4PF.
Opens LinkedIn