British Airways and KLM have led what promises to be a strong round of European airline profits in the June quarter as the region's traffic continues to boom.
The UK flag carrier, reporting the first quarter of its financial year, was back on track after the profits dip caused by last year's strike. Operating profit was up by nearly one-quarter and the underlying net profit, excluding last year's gains from the sale of its US Airways shares, was up by close to 60%. BA adds that its three year efficiency programme is still on track to deliver annual gains of £1 billion ($1.6 billion) by 2000.
BA notes that the results come despite turmoil in Asia and a weakening economic outlook in the UK, as well as the strength of sterling. Strong growth from transatlantic and European markets kept traffic moving, although load factors slipped back from last summer's record highs. KLMhad earlier turned in a similarly upbeat quarterly result, despite a slight dip in traffic to US and Asia-Pacific markets. Although the Dutch carrier is staying with earlier predictions for an improved full-year result, it highlights concerns over the growing impact of the Asian downturn and union strife at its US partner, Northwest Airlines.
The group has continued to use up its cash mountain, closing its deal to buy back shares still held by the Dutch Government and the flightcrew pension fund. The deal, valued at just under Dfl1 billion ($500 million), was completed on 14 August, leaving the state holding only preference shares and a 14% vote.
News was less buoyant at SAS, where labour disputes - hitting especially hard at the Copenhagen hub - shaved 5.5% off expected passenger traffic growth for the quarter. Overall, the airline was left with a 2% decline.
There are signs that Europe's traffic boom may be starting to ease. The Association of European Airlines notes that passenger growth for its members dipped sharply in June, to 4.5%, less than half the rate averaged in the previous five months.
Source: Flight International
