TOM GILL / LONDON
Post-11 September price cuts mean lower yields, but capacity reductions and cost-cutting have reduced losses
First-quarter figures from Europe's major airlines confirm hopes that the continent's carriers are recovering fast, unlike their counterparts across the Atlantic. Although yields are still low, partly due to price cuts intended to tempt passengers back, cost cutting measures mean that losses are falling.
Andrew Light, an analyst at Salomon Smith Barney in London, says the results show that European airlines are "doing much better" than US carriers. "The results are in line with our expectations of a small recovery and break-even at a net level this year," he adds.
Switzerland's new flag carrier, Swiss, has exceeded targets in its business plan with a first quarter consolidated loss of SFr190 million ($119 million). The company, formed from defunct Swissair and its regional subsidiary Crossair, says it was SFr100 million better off at the end of March than it forecast in December. Sales in the first three months of 2002 amounted to SFr517 million on 1.9 million passengers carried. Yields were below last year's levels, reflecting substantial price cutting, but 5% higher than budgeted. "We can assume that the loss for the full year will be less than the SFr1.1 billion anticipated," says Swiss chief executive André Dosé, "But it is too early to give an exact forecast of full-year results." Dosé has previously forecast a profit in 2003.
Alitalia reported a sharp reduction in first quarter losses helped by post-11 September cost savings and lower fuel costs. The Italian flag carrier posted a loss before tax and exceptional items of €103 million ($94 million) compared with a loss of €200 million in the same period last year. The savings from the restructuring plan introduced after the terrorist attacks on the USA helped offset an 11% fall in revenues to just under €1.1 billion. The airline says the outlook is "tending towards a substantial reduction in losses" and reaffirms that it expects a net loss of €53million this year.
Lufthansa more than doubled operating profits in the first three months to €12 million from €5 million, also as a result of labour cost reductions and capacity cutbacks. Revenues rose 6.1% as average passenger yields advanced 1.2% on a rise in the proportion of premium class traffic.
Air France, to publish full-year financial results next week, has confirmed its forecast of a profit in the year to March 2002. Full-year passenger revenues advanced 3.6%, while cargo sales dropped 2.9%, leading to a 2% overall rise in turnover to €12.5 billion.
Scandinavian Airlines (SAS), though, unveiled a big swing into the red in the first quarter, posting a worse than expected pre-tax loss of SKr1.45 billion ($136m), from a SKr40 million profit last year. SAS blamed an 18% fall in business traffic and high costs. It expects to remain in loss for the year.
Source: Flight International
