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Premium decline leads British Airways traffic lower; Air France-KLM expecting disruptions

European airline shares climbed again on Friday (03-Sep-2010) as wider markets reached a three-week closing high. Markets were up on news US employment declined much less than expected in Aug-2010, a sign the economic recovery is performing better than previously thought.

In key markets, UK’s FTSE (+1.1%), Germany’s DAX (+0.8%) and France’s CAC (+1.1%) all ended trading higher.

Premium decline leads British Airways traffic lower

British Airways (+0.6%) gained marginally despite the carrier reporting a 0.3 ppt year-on-year decline in load factor for Aug-2010, to 84.4%. The decline was led by a 1.3 ppt fall in trans-Atlantic loads, to 86.7%, while Asia Pacific loads slipped 0.1 ppts, to 86.2%. More positively, UK/Europe load factor rose 1.7 ppts for the month, to 82.2%, while Africa/Middle East load factor rose 0.1 ppts, to 80.4%.  

The overall decline in load factor was the result of a 2.9% decline in traffic (RPMs) as capacity (ASMs) was reduced by 2.6 ppts. The fall in traffic included a 1.4% decrease in Premium traffic and a 3.1% decrease in non-premium traffic. BA attributed the reduction in Premium traffic to promotional activity in the premium cabins last year.

Passenger numbers for Aug-2010 meanwhile fell 0.1%, to 3.2 million. However, the carrier stated market conditions remain as previously anticipated, with overall summer volumes slightly lower than the peak levels seen last year and strong yield performance in both premium and non-premium.

See related CAPA Profile: Premium Traffic

Air France-KLM expecting disruptions from national strike

Air France-KLM (+0.7%) also gained marginally despite stating it expects some disruptions to flight operations from national strikes related to reforms proposed for the national pension system. The strikes are to be held on 07-Sep-2010.

See related CAPA Profile: Industrial Relations 

European investors are meanwhile awaiting Air France-KLM’s Aug-2010 traffic results as an indicator of how the European economy is recovering. Also due to report this week are Air Berlin (+1.2%) and easyJet (+1.9%).

El Al (+7.5%) was the biggest gainer of the day, while Norwegian (+3.2%) and Aegean Airlines (+2.8%) also made strong gains. Aer Lingus (-0.5%) and Vueling (-0.2%) slipped.

Europe selected airlines daily share price movements (% change): 03-Sep-2010