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- 31 Viltanioti St 14 Kifissia
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- Aegean Airlines
Athens-based Aegean Airlines is a full-service airline, having a dominant domestic position in Greece and a growing presence in international scheduled routes between Greece and destinations in Europe and neighboring countries. Aegean offers its passengers premium services such as a dual-class cabin configuration, in-flight catering and reserved seating, through an extended domestic and international scheduled routes network. Aegean also operates seasonal charter flights to a significant number of Greek and international destinations. Aegean Airlines became a member of the Star Alliance in Jun-2010.
Location of Aegean Airlines main hub (Athens International Airport)
Aegean Airlines share price
309 total articles
19 total articles
The year 2013 will go down in Aegean’s history as a year to remember. The Athens-based carrier has already packed a lot into its short life since it commenced operating scheduled passenger services in 1999. In that time, it has transformed its fleet; moved its head office; experienced growth, decline and a return to growth; seen a significant increase in LCC competition; become a regional partner to Lufthansa; joined the Star alliance; listed its shares on the Athens Stock Exchange; and undergone more than one merger.
2013 will go down as the year in which it acquired Greece’s former national flag carrier, Olympic Air, and in which it reversed a three year period of losses to record an annual profit once more. In the first nine months of 2013, it was back in the black, turning a EUR9 million loss into a EUR59 million profit. Although revenue per passenger growth slowed in 3Q, it stayed ahead of growth in cost per passenger. Nevertheless, with unit costs (CASK) higher than those of LCC competitors, it must now use the Olympic acquisition to drive cost synergies as far as possible.
On 9-Oct-2013, the European Commission (EC) approved the acquisition of loss-making Olympic Air by loss-making Aegean Airlines. Although a previously proposed merger of the two was blocked by the Commission in early 2011, its analysis now indicates that Olympic would go broke in the near future if it were not acquired by Aegean.
This would leave Aegean as Greece’s only significant domestic carrier. The EC argues that the competition provided by Olympic on domestic routes would disappear regardless of the acquisition. It concluded that any competitive harm caused by the removal of Olympic as an independent competitor is not caused by the merger, which “is compatible with the internal market and must be authorised.”
This raises some interesting questions. For example, why did the EC not give fuller consideration to the possibility that new entrants might fill the gap left by Olympic? And why is Aegean paying EUR72 million for a loss-maker that the EC says is “highly unlikely to become profitable in the foreseeable future under any business plan”?
Greece’s largest airline Aegean Airlines reported a first half profit in 1H2013 for the first time since 1H2009, putting it on track to post its first full year profit since 2009. Aegean has laid down a good track record of cost control over a number of years, but unit revenue weakness has undermined this and led to annual losses.
The return to profit for the half year was due to strong growth in revenues, led by international routes and driven by a significant rise in RASK. Tight capacity management contributed to this performance and Aegean will be hoping that strong unit revenues can be sustained into the second half in spite of growing LCC competition.
Meanwhile, the European Commission is expected to rule on Aegean’s proposed acquisition of Olympic Air in Oct-2013 and this will be the key strategic milestone in 2H2013.
This analysis updates CAPA's previous study of European airlines’ labour productivity ("European airlines’ labour productivity. Oxymoron for some, Vueling and Ryanair excel on costs") to reflect the most recent financial results and adds four carriers not included in the original article (Wizz Air, Aegean Airlines and the two IAG subsidiaries British Airways and Iberia).
The contrasting performance of LCCs and legacy carriers is clear, although there are some notable exceptions to the pattern. BA and Iberia’s different labour cost productivity is significant, while Air France-KLM and SAS are weak performers.
We introduce an overall CAPA European airline labour productivity ranking, revealing the carrier with Europe’s most productive workforce, based on six measures.
Aegean Airlines seems to be caught between the devil and the deep blue sea, challenged both by a very weak domestic market and by an increasingly competitive international market where it has neither cost leadership nor a global network. If approved by the EU this year, will its planned acquisition of Olympic Air provide a route to safety?
Aegean reported its third successive loss in 2012, albeit a narrower one than in 2011, as passenger numbers fell by 6%. Aegean managed to reduce costs at a similar rate and to limit the revenue fall to 2% by cutting domestic traffic and international traffic from Athens while growing international traffic from provincial Greek cities. Double digit passenger growth from 2003 to 2009 has been followed by domestic-led decline, with Athens (Aegean’s main hub, where it is the biggest carrier) a falling market. Although it has leading positions at its other Greek bases, LCCs are increasingly making their presence felt there.
For several years now the Greek Government has philosophically contemplated conceding its regional airports to the private sector, even of floating its share of Athens Airport via an IPO, but has been restrained by its indebtedness.
Just as Greece desperately needs help to reduce its massive deficit, its airports lack investor appeal for the same reasons, i.e. the negative effect on both in and outbound travel brought about by the sovereign debt crisis, ultra high unemployment, the possibility that the country may leave the European Monetary Union and even the breakdown of civil order.
Nevertheless it appears the government is finally to make an attempt at privatisation, by leasing 21 regional airports and with the tendering process starting immediately.
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