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Several European airlines followed announcements of large
profits from their U.S. counterparts by unveiling similarly spectacular figures
for the third quarter. Details released by British Airways, Iberia and
Lufthansa, among others, in their results statements implied that customers are
paying higher average fares owing to a combination of more long-haul travel, a
return to premium cabins and higher load factors that have pushed passengers
into higher-fare buckets.
BA on Friday announced an operating profit of £370 million
for the three months ending Sept. 30. In the same quarter last year, it made a
loss of £17 million. In common with 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 second quarter had it not been for the
volcanic ash crisis.
BA's financial year starts on April 1, and in the six months
ending Sept. 30 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."
The airline announced that from spring 2011 it would resume
using a second Boeing 747 that it had parked during the recession, although
with demand expected to continue improving, the additional capacity is unlikely
to hurt yield. BA maintained a cautious outlook, expressing concern in
particular over the United Kingdom's air passenger duty, which will increase 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.
BA also revealed that it now expects to complete in January
2011 the merger with Iberia, subject to a shareholder vote on Nov. 29. Iberia
unveiled on Friday 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. Iberia attributed a 4.3 percent increase in
average earnings per revenue passenger kilometer to growth in long-haul
business class passengers.
Meanwhile, the Lufthansa Group on Wednesday 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 the group's carriers made a
profit during the quarter, including small surpluses for Austrian Airlines and
British Midland—the first since Lufthansa acquired them.
While claiming that it continues to be challenged by a
highly competitive marketplace, especially on short-haul routes, Lufthansa said
it expects to achieve profits in excess of €800 million for the full calendar
year. Air France also issued profits guidance this week, saying it expects to
achieve a positive figure in the year to March 2011, having previously warned
it only hoped to break even because of the ash crisis.
Another airline celebrating a return to profitablity this
week was Finnair, which announced a profit of €42 million after spending the
previous seven quarters in the red.