Cimber Sterling plummets after revising outlook; Lufthansa & Austrian to enhance cargo cooperation

European airline shares were mixed on Wednesday (24-Feb-2010), as strikes across the continent continued to have a negative effect on some carrier’s shares. In the wider European markets, shares gained, pushed higher by the banking sector, after US Federal Reserve Chairman, Ben Bernanke, stated US interest rates would remain very low for quite some time.

In key markets, UK’s FTSE (+0.5%), France’s CAC (+0.4%) and Germany’s DAX (+0.6%) all ended trading up.

Cimber Sterling plummets after revising full year outlook

Cimber Sterling's shares plummeted 32% after the carrier reduced its full-year outlook for a second time since its listing on the stock market less than three months ago.

The Danish LCC stated it believes the negative market conditions will continue in the fiscal fourth quarter, with the reduction due to "increased competition, with severely squeezed fares, lower demand and extra costs related to the severe Winter weather".

The carrier now expects an operating loss of DKK200-220 million (EUR27-30 million), before IPO costs of DKK10 million (EUR1.3 million), down from a previous forecast of a DKK60 million (EUR8.1 million) loss. More positively, the carrier expects an operating result of between a DKK30 million (EUR4 million) loss and a DKK30 million profit for FY2010-11. The expected significant improvement as compared with the current financial year is, according to the carrier, "driven by the great interest in the summer programme 2010, a substantially optimised production programme, the effects of the already initiated project programmes “Odin” and “Thor, and an assumption that we have now reached the bottom with the dramatic price falls"

Norwegian Air Shuttle (+4.1%) rose as a result, while SAS (+1.6%) also made gains. Cimber shares have now fallen 71% since its debut on the stock market on 01-Dec-2009.

Aer Lingus threatens to cut 1,100 jobs

Aer Lingus (-3.5%) was also down after news the carrier reportedly advised staff of plans to cut 1,100 jobs and further scale back operations if staff do not approve its proposed EUR97 million “Project Greenfield” cost cutting programme. Aer Lingus declined to comment on the reports. Project Greenfield includes 676 job cuts, reductions in pay of up to 10% and a three year pay freeze. Voting on the programme commenced this week.

Turkish Airlines (-5.6%) and Aegean Airlines (-3.9%) also suffered a decline in share prices.

Lufthansa and Austrian agree to enhance cargo cooperation

Lufthansa (-0.3%) and Austrian Airlines agreed to step up cooperation between their two companies in the airfreight sector. Under the new agreement, the flow of cargo traffic through the hubs at Frankfurt, Munich and Vienna will be optimised. Both companies’ global distribution activities will be merged through the agreement. Sales and production to be integrated with effect from 01-Jul-2010.

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Europe selected airlines daily share price movements (% change): 24-Feb-2010