Andrew Doyle/NUREMBERG
Eurowings is targeting improved load factors and aircraft utilisation as it bids to boost flagging profitability amid concerns over the future of its successful marketing alliance with KLM. The German regional is also considering an order for up to five BAE Systems RJ-Xs to satisfy its short-term 90-seater requirement.
Dortmund-based Eurowings' operating profit fell to DM10.3 million ($5 million) last year, down a third on 1998, a figure new executive chairman Friedrich-Wilhelm Weitholz says is "far too low". Pre-tax earnings of DM20-30 million are being targeted. Last year's profit was achieved on slightly higher revenues of DM730 million, with just over three million passengers boarded.
A new strategy of limiting capacity growth, eliminating crew shortages and dropping unprofitable routes is showing results, with double-digit revenue growth in the first five months of this year, although the carrier is suffering from its failure to hedge against fuel price increases.
The current focus is on improving load factors, which was just 56%for 1999. Weitholz also believes a 30%increase in capacity can be squeezed out of the fleet through better scheduling.
Uncertainty about the alliance with KLM, which may merge with British Airways, is also giving cause for concern, while growth at Milan Malpensa has failed to materialise.
Eurowings is continuing discussions with Bombardier, Embraer and Fairchild over its fleet requirements. It expects to place an order for up to 30 aircraft in the 70-90-seat category next year. The current fleet includes 10 BAe 146s and 27 Aerospatiale/Alenia ATR 42/72 turboprops, plus five Airbus A319s used on charters. A decision on taking the RJ-X as an "interim solution" will be taken in the third quarter.
Source: Flight International
