Brussels Airport

Air Canada touts continuing transformation as 2Q2012 losses widen

Two major elements driving Air Canada’s 2Q2012 negative financial results – labour strife and pressure created by the sudden shutdown of its major maintenance provider Aveos – are the areas where the carrier sees prime opportunities in the future as new labour agreements allow for the creation of a new low cost carrier and negotiations with new suppliers ensure a substantial improvement in the costs of airframe maintenance.

Air Canada management during the last year has often cited the transformation that needs to occur at the carrier in order for the airline to compete in the new competitive environment ushered in by LCCs and spiking fuel prices. But in the short term the company still must deal with disgruntled employees and increasing competitive pressure that will not pause as Air Canada works to complete its transformation.

During 2Q2012 Air Canada widened its losses year-over-year by CAD50 million (USD50.2 million) to CAD96 million (USD96.4 million), while net losses for 1H2012 expanded by CAD241 million (USD242 million) to CAD306 million (USD307 million).

US carriers to slash fourth quarter trans-Atlantic capacity as Europe's outlook dims

Increasing economic uncertainty in Europe has resulted in US carriers pulling back capacity to the continent later this year to proactively contain losses and a drop-off in traffic that could result from the increasing likelihood of Greece’s exit from the euro zone and the Euro falling to a two-year low against the US dollar. Delta has already stated its goal to reduce capacity 5% across the Atlantic during the fourth quarter, while United has already instituted schedule changes that show a pull-down in secondary European markets. US Airways, which during the last year has enjoyed marked success in its trans-Atlantic business segment, has not declared any plans regarding its capacity to Europe later in the year. But the carrier is launching several seasonal services on the back of its strong performance in the European market.

Trade group Airlines for America (A4A) estimates that during the fourth quarter of this year US carriers will reduce their capacity to Europe by 7.8% as they attempt to better manage seasonality and stave off effects of a recession on the continent. This change is significant as Western Europe is still the largest international market from the US.

Brussels Airlines to further expand in Africa and launch New York but cut back in Europe

Brussels Airlines plans to further expand capacity on African routes in 2012 while shrinking its European operation as Boeing 737s are phased out as part of a narrowbody fleet simplification initiative. The Lufthansa Group subsidiary will also resume service to New York in 2012, a move made possible by expansion of its A330 fleet and designed primarily to better serve the fast-growing US-Africa market.

Africa has been a second home market and the main focus for Brussels Airlines since it became part of the Lufthansa Group and entered the Star Alliance in 2009. The carrier is keen to continue this focus as the European market becomes even more challenging for small flag carriers given the region’s banking crisis and increasing competition from low-cost carriers. As an emerging market with huge potential and limited competition, Africa offers carriers from mature markets opportunities for growth and the increasingly unusual combination of high yields plus high load factors.

Rail link plans fall through but demand remains high

For the air transport industry to remain competitive with what is an increasingly ‘preferred’ mode of transport in the EU and beyond – rail – the air-rail link is, ironically, a saviour. In two recent cases such links have been postponed or called into question by a bidder, but there are still plenty of schemes in the pipeline, with Europe leading the way in this field.

The scheme that has been postponed is one at Dublin, Ireland, where the Transport Minister confirmed early in Nov-2011 that investment in transport infrastructure generally will be scaled back significantly over the next five years. Overall spending on transport capital will fall by almost 50% from EUR1.5 billion in 2011 to EUR0.8 billion in 2016. As part of this reduction, the Government will postpone the new rail link to Dublin International Airport. Prime Minister Enda Kenny stated, “We cannot afford to do all that we want to do. This plan is based on what the country can afford. We face a large budget deficit, dependent on support funding and operate in a very challenging international environment."

Etihad Airways extends reach with TAP codeshares to Portugal

United Arab Emirates national carrier Eithad Airways has signed a codeshare agreement with TAP Portugal, expanding its global reach a little bit further. Etihad will gain a virtual network in Portugal – where competitors Emirates and Qatar Airways do not have flights to – by codesharing on TAP flights from common European points they both serve to Portugal, which Etihad does not fly directly to. TAP will codeshare on Etihad flights from their common European ports to Abu Dhabi. The agreement will largely force Emirates and Qatar, if they want a presence in the small Portuguese market, to either establish direct routes or partners with less geographically and schedule convenient carriers.

Etihad will place its code on TAP-operated flights from Lisbon to Brussels, Düsseldorf, Faro, Frankfurt, Funchal, Geneva, London, Milan and Porto, in addition to flights from Porto to Brussels and Geneva. In return, TAP will place its code on Etihad Airways flights to and from Brussels, Düsseldorf, Frankfurt, Geneva, London, and Milan, with the two carriers effectively establishing mini transfer hubs at those airports.