oneworld revenues rise ten percent

5th Jun 2007

Revenues from oneworld alliance fares and sales activities rose by more
than 10 per cent year-on-year to almost US$675 million in 2006, helping
its partners maintain their record as the most financially sound
grouping of airlines.The seven established member airlines sharing those alliance revenues -
American Airlines, British Airways, Cathay Pacific Airways, Finnair,
Iberia, LAN and Qantas - classified almost two-thirds of that US$675
million total as “incremental” revenue, or money they would not have
earned had it not been for oneworld.

These revenues are expected to be given a substantial boost in 2007 with
the addition to the alliance of Japan Airlines and its associates, Malév
Hungarian Airlines, Royal Jordanian and affiliates LAN Argentina and LAN
Ecuador from 1 April, followed by Dragonair later this year.

oneworld sales to the corporate sector were particularly strong in 2006,
with revenues from corporate accounts increasing by almost two-thirds.

businessflyer, the alliance’s product for small and medium sized
accounts in key target markets, generated more than twice as much
revenue as in 2005. More than 5,500 businesses are now signed up in
France, Germany, Switzerland, the Netherlands and now also Belgium -
almost 40 per cent more than a year ago, spurred in part by the
alliance’s first external advertising in five years.

Yields from oneworld sales overall remained strong, with almost
three-quarters of its alliance fares sold for travel in its member
airlines’ premium cabins.


Some 8 million passengers transferred between the established oneworld
member airlines’ flights in 2006, one in every 30 customers they boarded
throughout the year.

Revenues generated by this “interlining” activity within the alliance
rose almost 5 per cent to some US$2 billion, including benefits from
alliance fares and sales products. That represents almost 3.5 per cent
of the established member airlines’ total passenger revenues.

oneworld Managing Partner John McCulloch said: “In a business where
operating margins are generally thin and at a time when fuel prices have
reached record highs, revenues from oneworld represent an increasingly
important contribution to our member airlines’ financial standings - and
we are committed to increasing the contribution the alliance makes.

“Key factors behind this rise in revenues are the quality of the service
oneworld and its member airlines provide, our unparalleled international
route network and our unmatched range of alliance fares and sales
products. We expect April’s addition of our new recruits, followed by
Dragonair later this year, to give these revenues a significant further

While continuing to build revenues for its member airlines, the alliance
also maintained its focus on supporting their efforts to reduce costs.
Savings from its joint procurement activities now total almost US$300
million, with the bulk of 2006’s benefits coming from initiatives in the
Engineering and Maintenance arena.

These efforts helped oneworld maintain its position as the most
profitable airline grouping. Based on the latest full year results from
all established members of all alliances, its established members
collectively achieved an operating margin of 5.7 per cent - against 3.4
for Star and 3.1 for SkyTeam. At the net level, the profit margin for
oneworld’s members collectively was 3.4 per cent, against 2.8 per cent
for Star and a negative 8.3 per cent for SkyTeam.

The combined net profits for oneworld’s seven established carriers in
their latest full years totalled more than US$2.3 billion, excluding
one-off extraordinary items. On the same basis - ignoring asset sales
and bankruptcy restructuring charges - the 17 member airlines of Star
totalled US$2.2 billion and SkyTeam’s 10 carriers US$1.1 billion.

Over the past three years, the combined net profits of oneworld member
airlines has totalled US$5.4 billion, while SkyTeam members have lost
US$18.6 billion between them and Star’s partners have reported
collective losses of US$20.8 billion. oneworld remains the only alliance
without a member having to resort to Chapter 11 bankruptcy protection.

The past year saw oneworld complete its biggest two airport co-location
projects yet. In February 2006 its six on-line airlines at Madrid moved
into the new EUR6 billion Terminal 4, while early in 2007 five of its
six on-line carriers at Tokyo Narita co-located alongside Japan Airlines
at its main international hub. Now the alliance is preparing for its
largest co-location activity since its launch, consolidating its
airlines’ operations at London Heathrow from March 2008 from the four
existing terminals to just two - Terminal 3 and the new Terminal 5.

oneworld also continued its award-winning ways, voted the World’s
Leading Airline Alliance for the fourth year running in the 2006 World
Travel Awards, based on votes cast by some 170,000 travel professionals,
including more than 110,000 travel agents in 200 countries.


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