Asian carriers are riding on the back of the region's economic revival, posting some record figures. Cathay Pacific, for example, is returning to the profitability levels once considered normal a few years ago, but dented so badly by Asian flu. Its operating margin for the first half is the envy of many of its contemporaries in Europe, who would be delighted to boast margins of 5%, let alone double-digit figures.
But Cathay is not content just to tread water, chairman James Hughes-Hallett wants to improve margins even further to provide the returns necessary to justify its huge spending on new aircraft. Cathay ordered four Airbus A330-300s, a Boeing 777-200 and a 747-400 freighter during the first six months of the year.
Taiwan's China Airlines is another Asian carrier feeling pleased with its progress. In addition to having the region's economic malaise to counter, it has had the after effects of the earthquake that pounded the island in September last year to cope with. Against this background, the airline went "all-out" to renew and simplify its fleet, "assure" flight safety, enhance service quality, control costs and hedge its fuel purchasing. As a result, unit costs in the first six months dropped 8.1%, compared to the first six months of 1999, while employee productivity soared by 19.1%.
While all European carriers face an increasing fuel bill and most are seeing traffic rises, their financial results range from the abysmal to the brilliant. Lufthansa and Air France are leading the way among the majors, while Poland's LOT and Finnair are making gains among the smaller flag carriers.
SAS, which posted steady gains in the first half year, noted the Europe-wide trend towards increased demand and reduced overcapacity continuing to correct last year's considerable overcapacity and falling profitability.
However, SAir Group chief executive Philippe Bruggisser speaks for many in expressing a profit warning for the full year with fuel prices as they are, despite the airline's increased capacity and rising productivity.
In addition, few carriers can escape the spectre of air traffic control delays. Costs, stemming from delays internationally and at its Zurich homebase, took $90 million off the SAir Group's bottom line during the first half.
Source: Airline Business
