Wednesday 21 August 2019

Growing disparity in fortunes of Europe's legacy airlines - Fitch

Mixed picture: Lufthansa CEO Carsten Spohr meets cabin crew members
Mixed picture: Lufthansa CEO Carsten Spohr meets cabin crew members

John Mulligan and Ellie Donnelly

THERE is a "growing disparity" between the financial performance of Europe's big legacy airlines amid an increasingly challenging environment, according to ratings agency Fitch.

"The gap between strong and weak airlines was already pronounced, but now even the larger companies are diverging," according to the group.

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It noted that the profit margin at IAG-owned British Airways was 12pc during the first half of the year, comparable with Ryanair and Wizz Air.

BA's performance was way ahead of that of Lufthansa, which recorded a profit margin of just 1.9pc in the first half, but eclipsed the 0.7pc margin at Air France-KLM.

Fitch said it expected European airlines' yields - the average price per ticket - to "remain soft" in 2019, "with the risks on the downside due to Brexit uncertainty and slower economic growth in Europe".

"Long-haul is likely to continue to offset negative pressure on short-haul yields for network carriers," it added.

IAG also owns Aer Lingus, Iberia, Vueling and Level. Ryanair owns Poland-based Ryanair Sun as well as Vienna-based Laudamotion and Malta Air.

Fitch said that given their mature profile, Ryanair and Easyjet will probably focus on consolidating their market positions, and taking advantage of M&A and "transformational business opportunities".

Meanwhile, traffic at the Ryanair group grew by 9pc in July to 14.8 million customers.

This includes Lauda traffic for last month, where passenger numbers increased by 20pc year-on-year to 600,000.

Ryanair itself recorded an 8pc increase in the number of consumers flying with it, to 14.2 million, up from 13.1 million in July 2018.

Irish Independent

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