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European carriers fall back, Air France-KLM, British Airways and Lufthansa all slip


Shares in Air France-KLM fell 2.9% yesterday, as it revealed its passenger traffic slumped 7.0% year-on-year in Jun-2009 and load factors eased 1.1 ppts to 80.3%. British Airways and Lufthansa both dipped 1.4% as the London FTSE closed virtually flat (-0.2%) and the Frankfurt DAX closed 1.2% lower yesterday.

Lufthansa is expected to offer antitrust concessions to the European Commission in the “next day or so”, for the Commission to decide on the carrier’s takeover of Austrian Airlines. Last week, the Commission launched an in-depth investigation into the planned acquisition citing “serious” competitive concerns. Austrian Airlines’ shares gained 1.9% as investors welcomed progress in the next phase of its restructuring plan (see below).

Elsewhere, Aer Lingus shares gained 4.5%, as the carrier increased its short-haul load factor by close to 1% in Jun-2009 to 82.0% and short-haul passenger numbers by 10.8% year-on-year.

Europe selected airlines daily share price movements (% change): 07-Jul-09

Austrian enters next restructuring phase – edited press release

Austrian Airlines presented the first measures of its sustainability package designed to increase its long-term competitiveness. Management has now decided on the next measures – the replacement of 50-seater aircraft with larger aircraft from the existing fleet. The reason: the collapse of the high-price business travel market and lower unit costs of larger aircraft.

Austrian’s 50-seater fleet will be reduced by up to 14 aircraft, including Canadair Regional Jets, which are operated by Tyrolean Airways under the brand Austrian arrows and Dash 8-300 aircraft.

Shrinking our fleet will also result in the reduction of jobs. We anticipate that we will need up to 400 fewer full-time positions at Tyrolean and in other divisions of the Austrian Airlines Group. This reduction forms part of the overall loss of 1000 full-time jobs within the Austrian Airlines Group by mid-2010, which we announced last week.

Austrian Executive Board Member, Andreas Bierwirth, stated, “We are currently checking our entire network – all routes, frequencies and transfer points – and will adapt these to the market situation accordingly. The following criteria are paramount for us in this regard: We want to increase profitability, despite lower yields, by using larger aircraft. And we want to retain the valuable transfer flows and the network in the core CEE market.”

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