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Lufthansa performs well on upgrade, BA saving the planet

23-Sep-2009

Shares in Lufthansa gained 3.1% yesterday, as the Frankfurt DAX added 0.72%, climbing for the first time in three days.

CA Cheuvreux raised its share price estimate for Lufthansa yesterday from EUR11 to EUR15. Cheuvreux also upgraded its 2010 industry earnings estimate, stating it expects “breakeven or higher, depending on the airline”.

Norwegian surging, SAS shrinking

Investors are speculating low cost carrier, Norwegian Air Shuttle, could overtake SAS within two years, if Norwegian maintains current passenger traffic growth rates. Norwegian’s passenger numbers were up 18.0% year-on-year in Aug-2009, while SAS Group passenger numbers dropped 15.7% year-on-year for the month (SAS, -16.9%; Widerøe, -1.4%; Blue1, -14.1%). Shares in SAS gained 2.8% yesterday, while Norwegian surged 9.5%.

‘We must seize this chance for the planet’ - British Airways Chief Executive

Meanwhile, British Airways CEO, Willie Walsh, addressed the UN Leadership Forum on Climate Change, stating the upcoming Copenhagen summit provides a "historic opportunity to make progress on curbing aviation's carbon emissions." Mr Walsh called on world leaders to support an unprecedented agreement between IATA, airlines, aircraft manufacturers, airports and air navigation providers that sets a target of reducing the industry's net carbon emissions by 50% by 2050 (see below).

Shares in British Airways were down 0.8% yesterday.

Elsewhere, shares in Turkish Airlines jumped (+5.0%), Air France-KLM gained (+4.7%), Iberia (+1.7%) and Aer Lingus were higher (0.7%).

Europe selected airlines daily share price movements (% change): 22-Sep-09

IATA presents proposals for climate change talks – edited press release

IATA presented its proposals for climate change talks to the UN Secretary General’s Summit on Climate Change in New York, which takes place in the lead up to the United Nations Framework Convention on Climate Change (UNFCCC) meeting in Copenhagen, to be held during Dec-2009.

The aviation industry presented a paper outlining the industry’s commitment to three sequential targets:

  1. Improving carbon efficiency with a 1.5% average p/a improvement in fuel efficiency to 2020;
  2. Stabilising emissions with carbon-neutral growth from 2020;
  3. Emissions reductions with a 50% absolute cut in emissions by 2050 compared to 2005.

The paper also outlined guiding principles to ensure that the global sectoral approach results in emissions reductions, retains funds for investment in environmental initiatives for aviation, preserves a level playing field, provides access to global carbon markets and ensures that airlines cover the environmental cost of their emissions.

IATA Director General and CEO, Giovanni Bisignani, stated “climate change is a global problem. Aviation is a global industry. And we need a global approach for this industrial sector if we are to deal with climate change effectively.

“Mechanisms designed for ground-based polluters will not work effectively for aviation which can emit CO2 across borders and over the high seas even on a single flight. And already uncoordinated national and regional schemes are creating a patchwork of punitive taxes that fill government coffers, but do little or nothing to effectively manage aviation’s emissions,” said Mr Bisignani.

“The Kyoto Protocol directed states to address aviation through ICAO. Its global standards and cooperation with industry have made air transport the safest form of travel. A global sectoral approach for aviation can leverage this same leadership to deliver results for aviation and the environment,” said Mr Bisignani.

“Our targets are tough. Air transport is the first industry to commit to carbon-neutral growth at the global level. And we have done it with an aggressive timeline of 2020. Our four-pillar strategy of technology investment, efficient infrastructure, effective operations and positive economic measures will make our vision a reality and is already showing results. Aviation’s emissions are expected to fall by 7% in 2009, of which 5% is a result of the recession and 2% directly related to the strategy. IATA’s ‘Green Teams’ have saved 34 million tonnes of CO2 through operational efficiencies since 2005. Our work on improving infrastructure, including shortening air routes, saved a similar amount of CO2 since 2004. But our success depends on governments playing their part. They must implement more effective air traffic management. The introduction of NextGen air traffic management in the USA and the Single European Sky have the potential to save 41 million tonnes of CO2 annually. Governments must also create the legal and fiscal framework to support the development of sustainable biofuels for aviation,” said Mr Bisignani.

“Aviation is unique in its ability to move globally as a sector - from safety to e-ticketing. Retaining a global sectoral approach at Copenhagen will deliver the best results in managing reductions in aviation’s emissions,” said Mr Bisignani.


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