Hard months ahead for European airlines


European airlines have overcome a difficult first half of 2013. Adjustments are still in place, while the traffic shows weak signs of recovery after the fateful 2012.

Semi-annual accounts still very affected by the restructuring, and the second half of the year is a fraught with difficulties. Altogether, the European Airlines transported more than 176 million passengers during the first six months of the year, 1.7% more than in the same period from 2012, with 78.7% occupancy,1.2 points higher than in the first half of last year.

According to the AEA, the European airlines are facing a crucial year to overcome these challenges through cuts in expenditure, adjustments in capacity and getting more income. A few challenges that jeopardize their profitability, according to the acting general Secretary of the Association, Athar Husain Khan. This has an impact both in the large groups and even in the unstoppable low cost companies.

German airline Lufthansa recorded in the first half net loss of 204 million euros, compared with a profit of $50 million recorded in the same period of 2012, due to the absence of extraordinary. This operating income declined between January and June by 69.4% to €72 million due to restructuring costs and special items.
Air France-KLM continues in losses in the first half, although reduced. They are of 793 million euros, 37.8% less than in the first half of 2012, when they amounted to 1,276 million.

IAG Group is no stranger to these problems. A few days ago showed an increase of losses between January and June of 155% to 503 million euros.

The improvement in oil prices, the foreign exchange market and cost savings, the company says, have caused this shift. Even so, in the accounts there is still a red lantern: Iberia. The Spanish company is still experiencing losses and managers warn that while not improve its competitiveness, its growth will be paralyzed.

Even the Irish budget airline Ryanair is living the difficulties of the exercise. It gained 78 million euros in its first fiscal quarter, between April 1 and June 30, which represents a fall in profit of 21% over the same period last year. According to the company led by Michael O’Leary, the decline in profit is the result of a 6% rise in fuel costs, which amounted to 577 million, and the Easter effect (which was held in March and not in April as in 2012).

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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