Cimber Sterling reports net loss for 3Q2009-10; Air France flight attendants planning strike

European carriers’ shares were mixed on Wednesday (17-Mar-2010), despite European markets reaching a 17-month closing high. Shares gained after the US Federal Reserve stated the day prior that it would keep interest rates near zero for the forseaable future.

In key markets, UK’s FTSE (+0.4%), France’s CAC (+0.3%) and Germany’s DAX (+0.8%) were all up at the end of trading. 

Cimber Sterling reports net loss for 3Q2009-10

Cimber Sterling (-4.4%) shares took the day’s biggest fall, after the LCC reported a net loss of EUR12.8 million for the three months ended 31-Jan-2010, compared to a profit of EUR1.6 million in the previous corresponding period, and an EBIT loss of EUR14.7 million, compared to a profit of EUR3.3 million in the previous corresponding period. The decline came despite a 16% year-on-year increase in revenue, to EUR45.2 million.

Yield also declined 48% year-on-year, to EUR 12.90 cents. Passenger numbers for the quarter were up 26%, to 495,633, while load factor was stable at 58%.

The carrier now expects to report an EBIT loss of EUR26.9 million to EUR29.6 million for FY2010, compared to the previous forecast of a loss of EUR8.1 million. Cimber also expects revenue of EUR207.7 million to EUR215.7 million, down from the previous forecast of EUR225.1 million to EUR231.9 million.

Cimber stated that as a consequence of the intensified competitive situation, it has been decided to optimise capacity utilisation and reduce the activity level to 23 aircraft units in own production, down from a previously expected level of 28 aircraft units. Meanwhile, the substantial optimisation of Cimber Sterling’s traffic programme for the summer of 2010 is expected to result in an increase in the number of seats offered as well as the ASK by more than 20% as compared with the summer of 2009.

British Airways corporate family rating downgraded

British Airways (-2.1%) was also down after Moody's Investors Service lowered British Airways' corporate family rating further one notch further into junk territory, commenting that pension woes would be a burden into "the foreseeable future". However, the ratings agency added that the company's liquidity remains satisfactory, adding that the carrier's planned merger with Iberia Lineas Aereas de Espana represents a positive development for both airlines, although it believes the financial impact will be longer-term. Moody's also lowered BA's corporate family and probability of default ratings by one notch each to B1 (which is four notches into junk territory). Last month, Standard & Poor's Ratings Services lowered BA by one notch to BB- (which is one notch above Moody's new rating), citing expectations of only a gradual improvement in the sector in 2010 and 2011, as well as potential for labour issues and uncertainty about pension woes.

Air France flight attendants planning strike

Air France KLM (+1.0%) gained despite reports its flight attendants plan to stage a four-day strike between 28-Mar-2010 and 31-Mar-2010 if they are unable to come to an agreement on working conditions that will accompany proposed changes in services on short and medium-haul services in France and within Europe. Six trade unions are supporting the walk-out.

Vueling (+10.7%) and El Al (+6.4%) also gained.

Also in today’s Europe Airline Daily:

  • British Airways strengthens strike contingency plan;
  • Monarch reports 87% on-time performance rate for week commencing 08-Mar-2010;
  • Air Europa to add Lima service;
  • Germanwings takes delivery of 28th A319 aircraft;
  • Borgarting Court of Appeals judgement on Norwegian and SAS case;
  • Russian Technologies and Aeroflot unable to reach agreement on aviation management.

Europe selected airlines daily share price movements (% change): 17-Mar-2010