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SAS reaches agreement with unions while British Airways cabin crew announce strike dates

15-Mar-2010

The majority of European carriers’ shares rose on Friday (15-Mar-2010) on gains in wider markets and positive news from Nordic carriers SAS (+5.6%) and Finnair (+2.6%). European markets gained on news industrial production in the eurozone rose 1.7% from the previous month in Jan-2010. Positive economic data from the US later in trading boosted European shares further.

In key markets, UK’s FTSE (+0.2%) and Germany’s DAX (+0.3%) rose, while France’s CAC was flat.

Finnair aiming to return to profits within a year, getting closer to Norwegian

Finnair (+2.6%) CEO, Mika Vehvilaeinen, told Bloomberg the carrier's goal for 2010 is to secure greater profitability from European “feeder traffic”. He added that the carrier is considering launching services to North America. The company is targeting a return to profit within a year following a EUR102 million loss in 2009.

Also during trading, Mr Vehvilaeinen stated the carrier is seeking a codeshare agreement with Norwegian Air Shuttle, as part of efforts to increase passenger numbers on its nine international services to Asia, and to gain marketshare from SAS Group (+5.6%).

This could be an interesting model for Europe's network carriers seeking strategies for structurally challenged short-haul markets. See related report: European LCCs now carry a third of all pax. Can full service airlines confine damage to short-haul?

Despite the news, Norwegian (-2.0%) was one of few carriers to end the session down. Dart Group (-4.0%), Eurofly (-1.6%) and Cimber Sterling (-0.2%) were also down.

SAS reaches agreement with unions

SAS (+5.6%) reached a final agreement with all four cabin crew and four pilot unions representing its pilot and cabin crew personnel, meeting one of the conditions for participation by its major shareholders (including the Swedish, Danish and Norwegian governments) in the rights issue. The agreements will result in approximately SEK500 million (EUR51.5 million) in annual cost savings through measures such as salary reductions, salary freezes, reduced allowances, reduced pensions and other reimbursements.

Iberia load factor improves in Feb-2010

Iberia (+3.4%) also gained after reporting a 4.1 ppts year-on-year rise in load factor for Feb-2010, to 80.6%. The result came as a reduction in capacity (ASKs), down 7.7%, outpaced the fall in demand (RPKs), down 2.8% for the month.

British Airways cabin crew announce strike dates

British Airways (+2.2%) was up despite cabin crew union, Unite, announced its intention to take strike action on 20-Mar-2010, 21-Mar-2010, 22-Mar-2010, 27-Mar-2010, 28-Mar-2010, 29-Mar-2010 and 30-Mar-2010. British Airways stated that if the strike proceeds, it is "intending to operate a range of flights", adding that "not all our flights will be cancelled".

The carrier is currently finalising flight schedules for the strike period and has temporarily stopped selling seats on all flights operating on the strike dates. The carrier added that subsidiary, franchise, codeshare and alliance services will operate as per the normal schedule. The carrier also stated that all services to/from London City and all long-haul services to/from London Gatwick will continue to operate normally, with the long-haul freighter programme also to be unaffected (although the short haul freighter programme will run with a few changes).

Davy Stockbrokers told Reuters, it estimates the strike action could cost British Airways approximately GBP20 million p/a, although this figure may be less, due to the contingency plans that the carrier has in place.

Also available in today’s Europe Airline Daily:

Europe selected airlines daily share price movements (% change): 12-Mar-2010


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