Can weight loss drugs save the aviation industry (some money)?

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Alphaville has received a LOT of research on stocks related to the impact of weight loss drugs such as Ozempic* and Wegovy (mainFT has a great overview here).

As the power of these treatments becomes clear, many analysts are asking a fundamental question about their industry: What will happen to the companies I cover if appetite suppression becomes readily available to part of the population? ?

Many analysts have taken a turn recently, with hypotheses such as:

gyms will sell more memberships
gyms will sell fewer memberships
stores will sell more clothes
stores will sell less and less clothing
people will buy more cosmetic treatments
people will buy less cosmetic care
people will spend more on travel
people will spend less on travel

etc.

Amidst all of this, there is one obvious and burning question that Citi has finally answered. From our inbox today:

CITIS TAKE
It is possible that increased use of Ozempic, Wegovy, and related weight loss/diabetes treatments could materially contribute to the weight loss efforts of its users in the United States. However, looking at some of our recent work on the A320’s flight capabilities, the potential payload advantage of carrying lighter passengers is negligible, particularly on short-haul flights. It would appear that the use of these treatments would need to be much more widespread to have a significant impact on the A320’s mission capabilities. Citi maintains Buy ratings on Delta, Copa, United, Air France/KLM, Volaris and Azul, among others.

OK, it’s not a completely absurd notion. Takeoff weight is an important issue for airlines, which have devoted a lot of attention to reducing the weight of their aircraft. But this seems really marginal. Here’s how Citi crunched the numbers:

With approximately 9 million users of Ozempic and Wegovy in the United States, or 3% of the population, Citi examined a scenario in which significantly increased use of these drugs would make only a marginal difference in payload planes. The basic assumptions and considerations of this exercise are as follows:

There are 160 passengers on an average domestic flight.

The average weight per passenger, from infants to seniors, is 150 pounds.

The total human payload weight of an average flight is 24,000 pounds (160 passengers x 150 pounds each = 24,000).

Air travelers are likely wealthier than the average resident, which means they are also more likely to be able to afford these medications.

9% of domestic passengers are Ozempic and/or Wegovy users, triple the current penetration rate.

9% of passengers per flight would mean that an average of 14.4 passengers per flight (9% of 160 pax) use these weight loss drugs (let’s round this figure to 14 passengers).

The average weight of all other passengers remains unchanged.

These 14 passengers each lost 10 pounds. This would reduce the total human payload weight per flight from 24,000 pounds to 23,860 pounds (146 passengers x 150 pounds each + 14 passengers x 140 pounds each = 21,900 + 1,960 = 23,860). This would equate to a reduction in human payload of just 0.6%.

There is no reduction in demand for food purchased on board or related activities such as airport food courts as these consumers eat less.

Neither drug still has serious long-term side effects.

Sure, the 140-pound payload drop is roughly equivalent to an adult, but that doesn’t mean there would now be an extra seat available on the plane. From the age of two, each passenger requires their own seat.

They add, although they have undertaken the above exercise:

It is also important to note that a more detailed analysis of fuel consumption or cost per seat mile improvement due to reduced passenger weight is not straightforward. These estimates vary depending on route conditions such as climb and descent profile, cruising altitude, in-flight temperature, flight distance, among others, while the calculation of these effects depends on data which are generally not available in the public domain.

So this is it.

*Update: A Novo Nordisk review asked us to clarify that Ozempic is a treatment for diabetes and to remind readers that its widespread use as a weight-loss drug is off-label. We apologize to anyone who started self-medication based on this article.