U.S. airlines have reported falling revenues Q3 this week, expressing little confidence in a sustainable turnaround, especially for business travel, and their shares have taken a corresponding dive.
U.S. airline unions have intensified their calls for greater scrutiny of industry alliances in a move that could create major problems for the proposed venture between AA, BA and Iberia. The Allied Pilots Association has urged the U.S. Department of Transportation to decline the application for worldwide antitrust immunity, citing European Commission concerns and AA’s refusal to address job-security, anti-competitiveness and national-security issues.
BAA has abandoned hopes of building a third runway at Heathrow in the face of staunch opposition from the Conservative party, saying it will not submit a planning application ahead of the general election in June.
Airlines are predicted to lose a total of $11 billion this year according to IATA – $2 billion worse than previously predicted. The impact of the recession on the airline industry is “worse than the impact of 9/11,” according to IATA CEO Giovanni Bisignani. He predicted that losses would continue until 2010 with the industry expected to report a $3.8 billion net loss.
British Airways has entered talks to buy BMI, the second largest carrier at Heathrow Airport. BA Chairman Martin Broughton has held talks in Germany over the weekend with Lufthansa, BMI’s parent company.
Passengers downgrading from premium to economy was reconfirmed by British Airways, which registered another month of falling premium sales. The flag carrier reported an 11.9 percent year-on-year fall in premium-class traffic in August. However its economy figures showed signs of recovery, rising 1.3 percent.
The aviation industry remains in “intensive care” and the months ahead will be marked by many uncertainties, especially the price of oil, according to the International Air Transport Association. International passenger demand fell 2.9% in July compared to July 2008 while freight demand was down 11.3%.
The ATOL levy on package holidays is to rise from October to make up the shortfall created by the collapse of XL Leisure last September. The Air Travel Trust Fund said it had to pay out nearly £29m to repatriate stranded XL customers, as well as refund those who had made bookings but did not travel.
Travellers from the UAE now have greater access to the American market, following regulatory approval for a new codeshare agreement between the award-winning Etihad Airways and American Airlines. The agreement, which comes into effect this week, coincides with Etihad launching flights to Chicago on 2 September 2009.
China’s flag carrier Air China has raised its stake in Cathay Pacific from 17.5% to 29.99% - just below the takeover threshold – in a deal worth HK$6.3bn (US$813m).
Finnair is to undergo an organisational restructure in a bid to stem its growing losses, and follows the president and CEO announcing his resignation follows a series of poor results, including a €56.9m operating loss in the second quarter.
Lufthansa’s group passenger numbers rose 12% year-on-year in July, helped by renewed confidence in Europe and Asia, and consolidation of BMI. The group carried 7.2 million passengers last month — up from 6.4 million a year earlier. Although the group’s cargo division experienced a 4.8% decline during the month.