It’s Do-or-Die for Some Airlines unless They Cut Emissions Faster

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(Reuters) - Some airlines risk failure if they do not cut carbon emissions quicker in the next three to five years due to a mismatch between short-term corporate travel targets and the airline industry's 2050 net zero target, an industry report said.

Airlines are also at a rising risk of shareholder activism at a time when major fund managers such as BlackRock Inc (BLK.N), Vanguard Group Inc and State Street Corp (STT.N) have publicly expressed concerns about climate change, the report from CAPA Centre for Aviation and Envest Global released on Wednesday said.

Several companies, such as HSBC Holdings plc (HSBA.L), Zurich Insurance Group Ltd (ZURN.S), Bain & Company and S&P Global Inc (SPGI.N), have already announced plans to quickly cut business travel emissions by as much as 70%. The CAPA/Envest report found the top quartile of 52 global airlines examined emitted an average of 30% less per passenger kilometre flown in 2019 than those in the bottom quartile.

Low-cost carriers like Wizz Air (WIZZ.L), Ryanair (RYA.I) and AirAsia (AIRA.KL) with newer fleets and higher load factors were among the best performers, while the worst included Turkish Airlines, Japan Airlines Co Ltd (JAL) (9201.T) and British Airways.

JAL said it was introducing more fuel efficient planes and looking to secure more sustainable aviation fuel to meet a target of lowering absolute emissions by at least 10% from its 2019 levels by 2030.

The CAPA/Envest report said JAL was able to break even with a carbon price of more than $160 per tonne based on 2019 earnings, whereas many airlines with lower profit margins would have reported a loss at a carbon price of $30 per tonne.