IATA May RPKs down (2.2%), representing second consecutive month of contraction

Research evidence excerpt

IATA May RPKs down (2.2%), representing second consecutive month of contraction

up 8.9%,

Europe up 3.8%, APAC up 1.3%, and North America up 1%, while the ME was down (28.8%), which is

an improvement from down (48%) in April. International ASKs contracted (2.4%), with PLFs of 83.7% up

70 bps YoY. We believe the lower YoY decline in international travel vs last month and improving ME

travel activity is encouraging.

Forward ticket sales for 2H26 travel weakened in May. Ticket sales in May for 2H26 fell by (7.4%) YoY, a

sharper decline than the (3.3%) decline in April. Weakness was driven by international bookings, where

sales fell by (10.2%) YoY while domestic bookings rose 6.0% YoY. Ticket sales for trips from the Middle

East recorded the steepest decline in May, down by (18.0%) YoY, with Africa and Europe also posting DD

declines. South America was the only region to record a YoY increase in ticket sales in May, driven by

the 9.7% growth in the domestic segment.

We remain overall bullish on the commercial AM in 2026 and believe investor sentiment is improving.

Investors remain hopeful in a de-escalation of the Middle East conflict, with Brent Crude Oil down

to ~$74/bbl, as most aftermarket stocks have seen strong MTD performances and are trading above

pre-conflict levels. We expect more upside potential in engine MRO as we expect it to continue

outpacing component MRO growth in 2026, but we appreciate that focus is shifting to 2027. While

accelerated retirements in the legacy engine market are a risk, we note that retirements historically have

lagged higher oil prices by over 6 months, and we believe airlines will remain cautious in accelerating

retirements given the lack of supply of new aircraft and the post-Covid travel boom still in recent

memory.