Air France-KLM, Lufthansa Group, IAG: Europe's legacy airline groups upbeat on unit revenue after 1Q

Europe's big three legacy airline groups collectively reported a wider net loss in 1Q2017 compared with the same period a year earlier. However, this deterioration was largely due to unrealised falls in the value of derivatives and currency translation items. At the operating result level, they collectively grew the combined profit and two of the three, IAG and Lufthansa, improved their operating margin. Air France-KLM's margin declined as a result of currency movements.

Perhaps the most consistent encouraging message from the big three European legacy airline groups is related to unit revenue. Although still falling, for all three the rate of year-on-year decline eased in 1Q2017 compared with 4Q2017. Their commentary on the outlook for unit revenue trends was also hopeful, although the capacity growth outlook in markets from Europe remains relatively high by comparison with historical trends, and geopolitical risks are always present.

Among the three groups, IAG continued to be the most profitable in margin terms. In the point-to-point/LCC segment - an increasingly important battleground - IAG's Vueling is growing at the slowest rate, but Lufthansa's Eurowings/Brussels Airlines combination and Air France-KLM's Transavia made bigger losses.