iata global aviation human capital summit, singapore, november 2011

Human Capital opportunities Human Capital opportunities and challenges in aviationand challenges in aviation

Guido GianassoVP, Human Capital, IATA

Global Aviation Human Capital Summit 2011

Why are we here

To review and discuss challenges and opportunities for

the HR leaders in the air transport industry

To share best practices and learn from each other

To identify areas of future cooperation

To identify how IATA can better support the air transport

industry in the human capital area


IATA – who we are

HC teamProviding HC support to 1500 IATA employees in 65 countries around the world

ITDI Providing combined training solutions for the commercial air transport industry:30.000 students and participants every year


Who is here

500 HR leaders in the air transport industry were invited: IATA member airlines / Non-IATA member airlines

Airports

Air Navigation Service Providers

Civil Aviation Authorities

International organizations and regional air transport trade associations

170 participants in Singapore


Who is here – some statistics


Our sponsors


Our partners

Supported by Held in

To represent, lead and serve the airline industry

Updated outlook for the Updated outlook for the global airline industryglobal airline industry

Cash flows are being squeezed

-5%

0%

5%

10%

15%

20%

2005 2006 2007 2008 2009 2010 2011

% re

venu

es

EBITDA as % revenuesseasonally adjusted

US airlines

Asia-Pacific airlines

European airlines

550

600

650

700

750

800

850

900

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011

Average international return fare, US$

Jet kerosen prices, US$ per barrel

Fuel prices and average fares

Jet kerosene price(left scale)

Average return fare(right scale)

Mainly by the rise in fuel costs

Fleet changes adding seats at 8% annualized rate

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

-200

-150

-100

-50

0

50

100

150

% c

hang

e in

airl

ine

seat

s

Cha

nge

in o

pera

ting

fleet

(a/c

per

mon

th)

Airline fleet developmentSource: Ascend

Deliveries Other factors Storage activity % change in seats m-o-m

Travel has held up but outlook is weaker

-15%

-10%

-5%

0%

5%

10%

15%

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011

% c

hang

e ov

er y

ear

Inde

x of

bus

ines

s co

nfid

ence

Worldwide growth in air travel and business confidence

Growth in RPKs(right scale)

Business confidence(left scale)

Freight markets have stopped growing

11

12

13

14

15

16

17

115

125

135

145

155

165

175

2007 2008 2009 2010 2011

Air

frei

ght F

TKs,

bill

ions

per

mon

th

Wor

ld t

rade

vol

ume,

200

0=10

0

Air freight volumes and world trade

World trade(left scale)

Air freight volumes(right scale)

Global growth slowing towards critical level

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

-6%

-5%

-4%

-3%

-2%

-1%

1%

2%

3%

4%

5%

6%

1970 1975 1980 1985 1990 1995 2000 2005 2010

Wor

ld G

DP

grow

th

Net

pos

t-tax

pro

fits

as %

reve

nues

World economic growth and airline profit margins

Net post-tax profit margin

World economic growth

Financial markets expect defaults in Europe

0

2

4

6

8

10

12

14

16

18

Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011

Government bond yields in Europe

Greece

Ireland

Portugal

SpainItaly

FranceUKGermany

Will reinforce medium-term geographical shifts – driven by growth of middle incomes

Global middle class in 2009 and prediction for 2030

And the potential to better connect large cities, particularly in ASPAC and LATAM

Source: UN, SRS Analyser

5-10 mln10-15 mln15-20 mln> 20 mln

Urban Popn. 2015

Short-term will add to growth disparities

-1

0

1

2

3

4

5

6

7

8

9

Euro area US Japan Latin America MENA Asia ex Japan

EIU's forecasts for GDP growth

2010

2011

2012

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012

Brent crude oil price and forecasts, US$/b

Futures 19 Sep

Highest Bloombergforecast

Lowest Bloomberg forecast

Fuel costs expected to stay relatively high

In this environment we expect profits to be positive but not strong

-30

-25

-20

-15

-10

-5

0

5

10

15

20

-9.0

-6.0

-3.0

0.0

3.0

6.0

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

F

2012

F

US$

billi

on

% re

venu

es

Global commercial airline profitability

Net post-tax losses(right scale)

EBIT margin(left scale)


HC: challenges and opportunities

How to drive change and innovation in our organizations

How to significantly cut costs while improving the customer experience

How to attract talent in an industry where employee branding has lost its strength and the ability to compete in terms of compensation is low



How to develop a strong and diverse pipeline of global leaders to replace the current generation

How to efficiently develop and retain talent at all levels of the organization

How to manage difficult trade unions in complex labour law environments



In order to better understand your view, we have conducted a survey with Egon Zehnder International


We look forward to…

Network

Learn from each other

Have some fun together


Thank you!Thank you!