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oneworld alliance revenues jumps by more than 10pct in 2006

5-Jun-2007

oneworld alliance reports revenue from fares and sales activities

rose more than 10% year-on-year to approximately USD675 million in 2006. The

alliance’s seven member airlines - American Airlines, British Airways,

Cathay Pacific Airways, Finnair, Iberia, LAN and Qantas - classified almost

two-thirds of the revenue as "incremental" earnings, that they would

not have generated without the alliance linkages.

These revenues are expected to be given a substantial boost in 2007 with the addition to the alliance of Japan Airlines and its associates, Malev Hungarian Airlines, Royal Jordanian and affiliates LAN Argentina and LAN Ecuador from 1 April, followed by Dragonair later this year.

oneworld sales to the corporate sector were particularly strong in 2006, with revenues from corporate accounts increasing by almost two-thirds.

businessflyer, the alliance's product for small and medium sized accounts in key target markets, generated more than twice as much revenue in 2006 as in 2005. More than 5,500 businesses are now signed up in France, Germany, Switzerland, the Netherlands and now also Belgium - almost 40% more than a year ago, spurred in part by the alliance's first external advertising in five years.

Yields from oneworld sales overall remained strong, with almost three-quarters of its alliance fares sold for travel in its member airlines' premium cabins.

Some 8 million passengers transferred between the established oneworld member airlines' services in 2006, one in every 30 customers they boarded throughout the year.

Revenues generated from interlining activity within the alliance rose almost 5% to some USD2 billion, including benefits from alliance fares and sales products. That represents almost 3.5% of the established member airlines' total passenger revenues.

oneworld Managing Partner John McCulloch stated "revenues from oneworld represent an increasingly important contribution to our member airlines' financial standings - and we are committed to increasing the contribution the alliance makes.

Savings from oneworld’s joint procurement activities now total almost USD300 million, with the bulk of 2006's benefits coming from initiatives in the Engineering and Maintenance arena.

Based on the latest full year results from all established members of all alliances, its established members collectively achieved an operating margin of 5.7% - against 3.4 for Star and 3.1 for SkyTeam. At the net level, the profit margin for oneworld's members collectively was 3.4%, against 2.8% for Star and a negative 8.3% for SkyTeam.

The combined net profits for oneworld's seven established carriers in their latest full years totalled more than USD2.3 billion, excluding one-off extraordinary items. On the same basis - ignoring asset sales and bankruptcy restructuring charges - the 17 member airlines of Star totalled USD2.2 billion and SkyTeam's 10 carriers USD1.1 billion.

Over the past three years, the combined net profits of oneworld member airlines has totalled USD5.4 billion, while SkyTeam members have lost USD18.6 billion between them and Star's partners have reported collective losses of USD20.8 billion. oneworld remains the only alliance without a member having to resort to Chapter 11 bankruptcy protection.

The past year saw oneworld complete its biggest two airport co-location projects yet. In February 2006 its six on-line airlines at Madrid moved into the new EUR6 billion Terminal 4, while early in 2007 five of its six on-line carriers at Tokyo Narita co-located alongside Japan Airlines at its main international hub. Now the alliance is preparing for its largest co-location activity since its launch, consolidating its airlines' operations at London Heathrow from March 2008 from the four existing terminals to just two - Terminal 3 and the new Terminal 5.


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