Several European airlines followed announcements of large
profits from their U.S. counterparts by unveiling similarly spectacular figures
for the third quarter. Details implied that customers are paying higher average
fares owing to more long-haul travel, a return to premium cabins and higher
load factors that have pushed passengers into higher-fare buckets.
British Airways announced an operating profit of £370
million for the three months ending Sept. 30. In the same quarter last year, it
lost £17 million. Like many other European carriers, this is the first
quarterly profit BA has posted since the recession started, although most would
have released positive figures for the second quarter had it not been for the
volcanic ash crisis.
In the six months ending Sept. 30, BA's passenger revenue
was up 7.9 percent while capacity was down 6.2 percent. In consequence, the
airline said, "Yields improved by 17.2 percent, 14.4 percent excluding the
impact of exchange, driven by price and mix across all cabins."
BA said in spring 2011 it would resume using a second Boeing
747 that it had parked during the recession. With demand expected to continue
improving, the additional capacity is unlikely to hurt yield.
BA, though, expressed concern over the United Kingdom's air
passenger duty, which increased by up to 55 percent on Nov. 1. "While
positive, the economic environment continues to be subject to uncertainty, to
which the increase in APD is unhelpful," according to the airline.
The carrier also revealed that it expects to complete in
January 2011 its merger with Iberia, subject to a shareholder vote on Nov. 29.
Iberia unveiled an operating profit of €77 million for the third quarter.
Capacity was up 3.4 percent, but demand was up 7.7 percent, thanks to a 15
percent surge in long-haul demand.
Meanwhile, the Lufthansa Group announced an operating profit
of €783 million, up from €218 million during the third quarter of 2009. It
cited sharp improvements in demand, especially on long-haul routes and its
cargo business, as well as cost-cutting measures and "realized synergy
potentials in the Airline Group." All group carriers made a profit during
the quarter, including Austrian Airlines and British Midland—the first since
Lufthansa acquired them.
While claiming that it is challenged by a competitive
market, especially on short-haul routes, Lufthansa said it expects to achieve
profits in excess of €800 million for the full calendar year.
Air France said it expects to achieve a profit in the year
ending March 2011, having previously warned it only hoped to break even because
of the ash crisis.
This report appears in
the Nov. 8 issue of Business Travel News.