EUROPEAN NETWORK CARRIERS’ RECOVERY HAMPERED BY EXTERNAL INEFFICIENCIES

Today, the Association of European Airlines released its financial forecast, which underlines that 2012 has been a particularly tough year for European airlines. The combination of a weak European economy and sky-high fuel prices together with the effects of an on-going euro crisis have put a huge pressure on the members of the Association of European Airlines and will result in an EBIT¹ loss of 1.3 billion euro on an EBIT margin of -1.3%, which is slightly better than the previously forecasted -1.5 billion euro.

The economic recovery from the crisis of 2008-2009 took a setback in 2012, slowing considerably as the year progressed. This left its mark on freight traffic: 2012 will end with a decline of 4% (comparing to 2011), which is 8% below 2008 levels.

At the same time, passenger traffic is untouched by the downturn. AEA members will transport an additional 10.5 million passengers in 2012, an increase of 2.9% over 2011 or an expected increase of 4.5% in revenue per kilometre (RPK) performed. With moderate and regionally targeted capacity expansion, passenger load factors will achieve an all-time high average of 79%, an improvement of 1.5 percentage points over last year.

Nevertheless, AEA member airlines are still in the red, the impacts of fuel cost, regulatory burden and the lack of a level playing field have plagued their operations with an accumulated loss of 4.1 billion euro since the beginning of the crisis. Although load factors are continuously showing positive results, there is no correlation with airlines’ yields. And the outlook for the upcoming year is not promising either, traffic growth for AEA airlines is expected to be mild.

“To cope with the existing and upcoming challenges, we see that our members are making tremendous efforts to cut internal costs and increase revenue. This year alone 17,000 job losses have been announced within our member airlines. But despite these measures, consistently high external costs will continue to erode our airlines’ profitability” said Athar Husain Khan, acting Secretary General of AEA. “We expect further commitments and practical steps from the Member States of the EU. AEA members are demanding that European initiatives such as the Single European Sky and regulation on ground handling as well as the global solution for Emissions Trading Scheme for aviation be realised as early as next year in order they can finally reap the benefit and show the first signs of recovery.”