SAS reports improved traffic but yields fall; Aegean Airlines down; Turkish Airlines up

European airline shares fell in line with weaker markets, as debt issues in Hungary continued to cause concern for the region’s financial stability. Airline share losses were compounded by IATA's prediction that the region's carriers would be the only ones to report losses for FY2010.

In key markets, UK’s FTSE (-1.1%), France’s CAC (-1.2%) and Germany’s DAX (-0.6%) all ended trading lower.

SAS reports improved traffic, but yields fall

SAS (+3.5%) gained after the group reported a 2.4% year-on-year rise in passenger numbers for May-2010, to 2.3 million. A breakdown of the group’s performance is as follows:

Load factor for the month rose 4.1 ppts, to 75.6%, led by a 4.5 ppt improvement in Scandinavian Airlines’ loads, to 76.5%. Blue1 load factor also gained, up 2.8 ppts, to 69.5%, while Widerøe load factor declined 2.5 ppts, to 60.6%.

However, Scandinavian Airlines’ yield fell 6.6% for Apr-2010, while revenue per ASK was down 11.8%. The carrier attributed the decline to the negative load factor for the month, following the closure of the European airspace due to the ash cloud. More positively, Scandinavian stated the yield outlook for May-2010 indicate yield (change) better or in line with Apr-2010.

See related CAPA Hot Issues Profiles:

Cimber Sterling and Air Berlin decline

Cimber Sterling (-4.9%) and Air Berlin (-1.2%) were both down after also releasing their May-2010 traffic results. Cimber reported a 20% year-on-year rise in passenger numbers for the month, to 229,694, while Air Berlin's passenger numbers rose 1.8%, to 2.9 million.

See related report: Revenue reductions for Air Berlin in May-2010; Cimber Sterling’s yields slump in Apr-2010

Elsewhere, Aegean Airlines (-6.9%) and Norwegian Air Shuttle (-4.8%) also fell for the day, while Aer Lingus (+1.7%), Turkish Airlines (+1.1%) and Ryanair (+0.9%) were the only other carriers up at the end of the session. 

IATA expects European airlines to report loss of USD2.8bn for 2010

IATA forecast Europe will be the only region in the red for 2010, expecting it to report a USD2.8 billion loss for the year. This is a downgrade from the USD2.2 billion loss forecast in Mar-2010, although it is an improvement on the USD4.3 billion that the region lost in 2009. GDP growth of 0.9% is not enough to support a recovery and the currency crisis clouds the future with uncertainty. Moreover, 70% of the USD1.8 billion loss in revenue as a result of the volcanic ash crisis was borne by European carriers. A series of labour strikes and strike threats have also affected the region’s performance, according to the industry body.

IATA expects full-year capacity (ATK) growth for European carriers to be flat for the year, compared with a 1.0% year-on-year decline forecast in Mar-2010. Capacity is estimated to have fallen 5.7% in 2009.

Traffic (RTKs) is now expected to rise 2.9% for the year, down from a forecast 4.2% growth. For 2009, IATA estimates traffic fell 8.7%.

See related CAPA Profile: Financial Results

Europe selected airlines daily share price movements (% change): 07-Jun-2010