European airline restructuring: survival strategies for 2014

With 2014 forecast by IATA to be yet another year in which Europe is the least profitable major region for airlines, strategies for survival continue to be under focus. The larger network carriers have not only been hit by LCC competition on short haul, but also have faced growing competition from the Gulf carriers and Turkish Airlines on long haul. Smaller full service carriers have also been hit by the growth of 'superhubs', forcing them to cut back their long haul networks.

Although margins are improving, they remain slim and profits are unevenly divided. A few European LCCs make decent returns, while the majority of full service carriers (FSC) make little or no profit and several (particularly the smaller ones) are loss-making. More bankruptcies cannot be ruled out.

CAPA's World Aviation Summit in Nov-2013 explored some of the strategic options for Europe's FSCs in a panel session moderated by Professor Rigas Doganis and including senior executives from Aer Lingus, Lufthansa, Transavia, Virgin Atlantic, Vueling and Bombardier.