SAS to pay Norwegian damages; Lufthansa eyes LOT Polish Airlines

European airline shares were mostly down on Thursday (30-Sep-2010) after wider markets fell for a fourth consecutive session. Markets declined after Ireland's Government announced that financial institutions AIB, Anglo Irish Bank and Irish Nationwide will require more funding from the state, a move which will see Ireland’s deficit increase to 32% of GDP this year, outweighing positive economic data in the US.

In key markets, UK’s FTSE (-0.4%), Germany’s DAX (-0.3%) and France’s CAC (-0.6%) all fell for the day.

SAS to pay Norwegian damages

SAS Scandinavian Airlines (-2.3%) declined after announcing the Court of Appeal (Lagmannsretten) in Oslo reached a decision in the appeal by SAS and Norwegian Air Shuttle (+1.4%) related to the ruling in a dispute from 2008 which SAS was held liable to pay to Norwegian damages and costs for unlawful use of Norwegian's trade secrets. The court ruled in favour of Norwegian Air Shuttle but the decision was not unanimous. SAS has submitted a request to the Norwegian Supreme Court for leave to appeal, which was not granted. The decision will have a negative effect on SAS' earnings of approximately USD29.7 million (SEK 200 million) in 3Q2010. Norwegian gained as a result.

Lufthansa eyes LOT Polish Airlines

Lufthansa (-0.6%) slipped for the day. The carrier’s CEO-elect, Christoph Franz, indicated during trading that fellow Star Alliance member LOT Polish Airlines is the most likely target for the group’s next acquisition. The Polish Government had announced plans to privatise the national carrier, and Mr Franz stated that the opportunity "is a change in ownership which we cannot ignore. Poland needs a strong airline. It cannot be in the country's interests if other airlines gain market share at the expense of LOT." The two airlines held talks in May-2009 when LOT was suffering as a result of the financial crisis, however its performance has since improved markedly. The airline has increased passenger numbers by 9% between Jan-Aug-2010 and reduced losses.

See related CAPA Profile: Mergers and Consolidation

British Airways expands Gatwick route network

British Airways (-0.3%) was also down. The carrier announced plans to expand its London Gatwick route network as part of wider plans to increase capacity on long-haul leisure routes. BA stated that it will operate to 25 domestic and European destinations and 16 long-haul destinations from its Gatwick base over winter. The airline increases increase frequencies on its St Kitts, Grenada, Barbados and Bermuda services in summer 2010 and will increase frequencies on its Barbados, Antigua, St Lucia and Cancun services. The airline added it is the largest airline operating between the UK and the Caribbean.

See related CAPA Profile: Route Changes

Elsewhere, Turkish Airlines (+3.5%) continued its recent rally, while Aeroflot (+2.2%) and Ryanair (+1.8%) also gained. Thomas Cook (-6.3%) continued its recent decent, while TUI Travel (-3.1%) was also down.

Europe selected airlines daily share price movements (% change): 30-Sep-2010