Airline Post » airline profits

Lufthansa Faces Unexpected Problems

Abbey — Fri, 30 Oct 2009 13:48:01 +0000

It became known that during the meeting with investors, Lufthansa told that it faced considerable risks concerning its earnings targets. The causes of the problem were fresh oil price rises and weak passenger demand. Shares of Lufthansa decreased by 5.5 per cent to close at €10.37. The German carrier is sure that such situation can be explained by a difficult operating environment.

Lufthansa forecasted that the current situation would remain during the current year. Moreover such airlines as the UK’s BMI British Midland and Austrian Airlines availed recently by Lufthansa would bring negative earnings contributions in the months ahead.

But according to analysts the group’s operating profit was better in comparison with the same period in 2008. Johannes Braun, of Commerzbank, characterized the group profit figure as a “big positive surprise” and hoped that he would be able to see stabilization in yields.

Many consider that despite the fact that the statement of Lufthansa was unexpected, the company made similar allegations in order to make its headline figures public and showed that it could influence on the market.

According to Justin Baer, American Airlines and US Airways decided to take actions in order to cover expenses amid the downturn in air-travel demand. Next year American is going to close an aircraft-maintenance facility in Kansas City and curtail repair stations that will cause to the loss of 700 jobs.

US Airways is considered to be a member of Lufthansa’s Star Alliance of international carriers and was going to intermit services between Philadelphia and five European destinations that would lead to the loss of about 1,000 jobs. The airline also wanted not to use the flight from Philadelphia to Beijing granted by US transport regulators but at the same time it would require to make some improvements in order to retain the option of re-applying in the future.

Airline traffic decreases as fees fatten

Dave — Mon, 28 Sep 2009 07:50:08 +0000

It’s a well-known fact that airline traffic has seriously decreased due to the economical recession. But U.S. airlines have found a way to increase their profit margin in spite of this fact – they are making more money by fattening their extra fees.

In the first six months of 2009, U.S. airlines made $3.8 billion for checking bags, canceling or rebooking flights, carrying pets and seats assignment, says a report from the Department of Transportation’s Bureau of Transportation Statistics.

This means an increase of $2.3 billion compared to the same time of 2008.

Everyone has noticed that airline fees are much higher this year than before.

And the most profitable fees are those for checked-in baggages, bringing in $669 million in April, May and June (a 276% increase compared to 2008). From January to June, airlines collected $1.24 billion in baggage fees.

Still, this is not the only source of profit for airlines. Revenue from fees on cancelling or rebooking a flight went up 52% (to $606 million) in the second quarter of 2009, while fees for carrying pets or choosing seats brought $673 million in the second quarter, as opposed to $565 million in 2008.

When should be expect smaller fees? It’s hard to say when the industry will recover; until then, we have to get used higher fees for our airline tickets.

photo source

RyanAir uncertain future, despite profits

Dave — Thu, 03 Sep 2009 12:56:43 +0000

Low-cost airline Ryanair, responsible for PR stunts such as charging passengers to use airplane toilets, announced earlier this summer considerable profits, as opposed to other low-cost carriers that have been hit by recession or went bankrupt. By charging its passengers for extra luggage, airline food or checking in, the Irish airline had an increase of 550% profit in the first quarter, translating into roughly $195 million. This increase is due to cheaper fuel prices and an increase in traffic.

Still, Michael O’Leary, Chief executive officer for Ryanair, says that predictions for this year are gloomy, the price war between lowcost companies resulting in a possible decline of over 20%.

Most of our competitors have recently reported declining traffic, falling yields and substantial losses. This is accelerating the pace of airline closures and consolidations,” O’Leary said in a statement.

“Our successful roll out of new routes and bases demonstrates the fundamental strength of Ryanair’s lowest fares model which even during deep recession continues to deliver growth.”

Ryanair previously declared that it planned to cut 30 percent of its flights this winter, due to huge aviation taxes imposed by Britain’s airports.