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Airline updates of financial losses and aid requests

22-Apr-2010 9:08 AM

Airline updates on financial losses/aid requests (operations are generally returning to normal):

  • Aer Lingus: Expects to incur cash costs of between EUR15-20 million following the grounding of its services on 15-Apr-2010 with almost 1,100 flights cancelled (RTTNews, 20-Apr-2010);
  • Air Berlin: CEO, Joachim Hunold, stated the carrier would not rule out seeking compensation if the situations ends up being comparable to 9/11 (Reuters, 21-Apr-2010);
  • Air France: Reported a daily loss of EUR35 million (Seeking Alpha, 21-Apr-2010);
  • Air New Zealand: Stated it has no intention of raising fares, despite disruptions which cost the airline approximately NZD2.5 million  (ONE News/Radio New Zealand, 22-Apr-2010; 
  • Air Zimbabwe: Has lost nearly USD1 million in revenues (PANA, 21-Apr-2010);
  • British Airways: Estimated the daily loss in revenues to amount to GBP15-20 million (Seeking Alpha, 21-Apr-2010). The carrier alsocalled on the EU and national governments to compensate carriers to allow them to cope with the closure of European airspace (Reuters, 21-Apr-2010);
  • Cathay Pacific: Reported a loss of HKD5.5 million per day (Takungpao.com, 21-Apr-2010);
  • Dart Group: Expects profits to be affected by approximately GBP2.8 million as a result of the disruption. The firm had to cancel more than 400 services. The carrier added that it was “comfortable that the Group has sufficient financial resources available to withstand a considerable period of disruption to Jet2.com's flying programme”;
  • Delta Air Lines: Net loss of approximately USD20 million (MarketWatch, 20-Apr-2010);
  • easyJet: Stated volcanic eruption caused the carrier to lose GBP40 million in lost business with a daily profit impact of GBP5 million (AFP, 19-Apr-2010); 
  • Emirates: As a result of the disruption, the airline has been losing approximately USD10 million a day (USD65 million in total) and around 100,000 passengers around the network have been affected. The USD65 million includes approximately USD60 million in income depletion and USD5-6 million in spending on accommodation for stranded passengers (Emirates Business 24/7, 21-Apr-2010); [more]
  • Emirates SkyCargo: Stated it is suffering revenue losses of up to USD2 million per day with around 4,000 tonnes of Europe-bound cargo being delayed (Business 24/7, 21-Apr-2010);
  • Etihad: Stated European flight cancellations have cost it in excess of USD25 million (AFP, 21-Apr-2010);
  • Germanwings: Estimates the flight ban has cost the LCC approximately USD4 million per day (Dow Jones, 21-Apr-2010). The carrier stated it would review its cost structure to find a way to offset the losses, but ruled out increased ticket prices due to the tough competition in the LCC market;
  • India: Carriers estimate a loss of almost USD18.5 million in passenger revenue already (Travel Biz Monitor, 20-Apr-2010s);
  • Insurance companies: Insurance companies are expecting little to no losses from the issue (Bloomberg, 21-Apr-2010). Aviva Plc stated refunds for flight cancellations are the responsibility of airlines and delays caused by volcanic eruptions are typically covered in travel insurance policies. RSA stated it does not expect losses from the Ash Attack to affect the group’s earnings. Allianz Global Corporate and Specialty stated it does not expect insurance claims from the issue, as its business interruption coverage it sells to airlines and airports only covers physical damage. Hanover Re also stated it does not expect any claims, while Swiss RE stated the likelihood of significant claims is “low”;
  • LOT Polish Airlines: Reportedly losing EUR5 million per day due to the grounding of its fleet (thenews.pl, 20-Apr-2010);
  • Lufthansa: CEO, Wolfgang Mayrhuber, stated European governments' decision to suspend air traffic did not reflect reality, adding that airlines often fly through sandstorms and other hazards which put particles into the air (Dow Jones, 21-Apr-2010). Mr Mayrhuber added that the airline's losses would be "considerable" and stated that while European airlines will not require a bailout to cover losses, they are seeking to discuss the effects of the disruption with European governments. In response, German Economics Minister, Rainer Bruederle, commented, "I very much welcome Lufthansa's statement from today that it has no intention to approach the Finance Minister or the government for financial aid" (Financial Times, 20-Apr-2010);
  • Moody’s: Indicated that at this time its ratings for European airlines and related structured transactions are not affected by the flight cancellations and airport closures, stating it believes that, for the most part, the rated airlines retain sufficient buffers to weather the disruption. However, Moody's added that this assessment could change if conditions do not improve in the coming weeks (Seeking Alpha, 21-Apr-2010);
  • MTU Aero: Stated it sees no negative impact on its business from the volcano activity (Reuters, 20-Apr-2010). CEO, Egon Behle, added, "we have no reason to assume that there will be more wear and tear on engines after planes start flying again". He added that he not expect the ash cloud to have a negative impact on MTU;
  • Pakistan International Airlines: Stated it is losing on average USD2 million per day, with the carrier expecting revenue losses to reach the USD25 million if the cancellations continue (thenews.com.pk, 21-Apr-2010);
  • Qantas: CEO, Alan Joyce, stated the carrier is losing AUD1.5 to 2 million per day (before tax), but added that the cancellations "won't affect our earnings forecast", which the airline expects to be in the AUD300-400 million range. Mr Joyce stated approximately AUD700,000 per day is being spent on accommodation and other needs of 200 stranded passengers in Asia (The Age, 22-Apr-2010);
  • Qatar Airways: Losing USD5.5 million per day (AFP, 21-Apr-2010). Has been paying USD250-300 per day to accommodate each of its passengers stranded in Doha;
  • Ryanair: Estimates losses of GBP6 million between 15-Apr-2010 and 22-Apr-2010, although the carrier added that the financial impact of the disruptions is "not an immediate concern" (Business and Leadership, 21-Apr-2010). CEO, Michael O'Leary, stated the carrier would "consider all passenger receipts for reimbursement of reasonable receipted expenses over the past week", but added that reimbursement "will be limited ... to the original fare paid by each passenger" (CNN/Metro, 21-Apr-2010). He continued, "there’s no legislation that says any airline getting a fare of EUR30 should reimburse passengers thousands of euros for hotel accommodation". The EC has stated that airlines are responsible for taking care of stranded passengers, with European Commissioner, Siim Kallas, stating passengers have "the right to care -- that means food, drink, and accommodation as appropriate". He added, "despite these exceptional circumstances, air passengers are entitled to all their usual rights, except the additional financial compensation that would apply in more normal circumstances". Meanwhile, Britain's Liberal Democrats criticised Ryanair's announcement as "outrageous" and "blatant defiance of EU consumer rules".
  • SAS Group: Estimated a daily loss of SEK50-90 million in earnings, which includes alternative travel arrangements for its passengers (Seeking Alpha, 21-Apr-2010);
  • Saudi Arabian Airlines: Reportedly lost approximately USD33 million (Okaz/AFP/Xinhua, 21-Apr-2010);
  • Singapore Airlines: Estimated its loss in revenue opportunity from flight cancellations and disruptions to Europe at SGD40 million, adding that the loss figure comprises SGD10 million from cargo operations and SGD30 million from passenger operations and does not take into account variable cost savings (Channel NewsAsia, 21-Apr-2010). The carrier also anticipates that a large portion of the SGD30 million from passenger operations will accrue from deferred travel as normal flight operations resume. It separately estimates the cost of hotel accommodation, meals and other facilitation of affected customers both in Singapore and at overseas locations as a result of the disruptions at SGD10 million;
  • South African Airways: Stated the grounding of its European services has cost it approximately USD1.9 million in lost revenues (Business Report, 21-Apr-2010). However, the carrier stated some of this may be recovered from passenger who still plan to take their flight at a later date. CEO, Siza Mzimela, stated the full extent of the losses would be determined once operations were back to normal;
  • Spanish tourism industry: Losses of up to EUR252 million from the closed European airspace (FOCUS, 21-Apr-2010);
  • TNT: Is reportedly facing higher operating costs after having to switch to road transport for some services across Europe (Business 24.7, 22-Apr-2010); 
  • Transaero: Losses of RUB18-20 million (USD620,000-690,000), with the costs related to "first, the expenditures to provide services for passengers of delayed flights, second extra takeoffs and landings in six to eight of our airlines, and third the return of tickets" (Xinhua, 21-Apr-2010);
  • TUI Travel and Thomas Cook: The two largest travel companies in Europe criticised the British government's response to the volcano, with TUI Travel CEO, Peter Long, stating, "the government's response to the crisis has been a shambles" (Reuters, 21-Apr-2010). He added, "it is clear that they underestimated the severity of the consequences of the decision for a blanket closure of the airspace for such a protracted period of time".