Red ink is flowing from major Asian carriers badly hurt by the effects of the SARS outbreak and the war in Iraq, but the outlook for the rest of the year has brightened as demand picks up more quickly than expected.
Malaysia Airlines (MAS) summed up the feelings of many Asian carriers as it moved into the second half of the year: "The SARS spectre appears to have receded and confidence in air travel is showing clear signs of recovery." MAS says that passenger load factors are rising and suspended services are being restored, while cargo operations continue to perform well.
For its part, Singapore Airlines (SIA) notes that "while it appears the worst is over, the outlook for the next quarter and the rest of the year is still uncertain". SIA fell into the red in its first quarter for the first time in its history as a public company - just one of the region's records to be broken in the wake of the SARS outbreak in March.
The region's crisis happens to coincide with a new round of more regular reporting from the region's airlines. SIA is joined by Japanese giants All Nippon Airways (ANA) and the newly consolidated Japan Airlines System Group in releasing their first quarterly results. That has helped make still clearer the damage done by SARS. All five of the carriers that have so far reported for the June quarter show falling revenues and mounting losses, led by the newly enlarged JAL Group.
However, Korean Air, reporting over the six months to June, provided a slightly more upbeat picture, with revenues rising and nearly managing to break even at the operating level.
A bright spot for Korean was its cargo business, which was "hardly affected by the Iraq war and SARS". Cargo revenue was up 7.2% in the half. In Hong Kong, traditionally profitable Cathay Pacific Airways made a record net loss for its first half to June. The carrier says it was "confronted by the greatest commercial challenge in the company's history" during the second quarter, when SARS adversely affected operations.
In Japan, ANA detects some reasons for optimism. Business traffic on its European routes has been quick to return, owing to the swift conclusion of the Iraq war, and was nearly back to 2002 levels by the end of June. In addition, US services were showing "robust growth" to levels approaching last year's. Business travel demand to Asia was also starting to return.
Qantas Airways has reported its first ever half-year loss as a public company for the six months through to June, but stayed profitable for the full 2002-3 year although net profits were down by close to 20%. Chief executive Geoff Dixon is upbeat about the year ahead, however, saying that Qantas "expects to improve on its performance in 2003-4".
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
