Air Transport World

Europe. (ATW's World Airline Report).(financial and management developments for European airlines)

AER LINGUS: The Irish national carrier made an unexpected recovery in 2002 and reported a net profit of [euro]35.3 million compared to a loss of [euro]139.9 million in the prior year. Operating margin was 6.7% versus a negative 4.7% in 2001. Chief Executive Willie Walsh followed what he called "avery clear and simple business strategy" encompassing relentless and aggressive cost-cutting and a major reduction in both business and leisure fares. In a move visibly copied from Ryanair, became the airline's primary sales channel.

Ferry operator Irish Continental Group indicated it would be interested in bidding for Aer Lingus once the airline is flagged for sale, and David Bonderman's Texas Pacific Group earlier in the year was reported to have signaled an interest in the airline. However, the carrier remains state-controlled and in April the government stated no buyers would be sought until conditions in the airline sector improved.

Aer Lingus is expected to decide in September on a fleet renewal/rationalization order. The airline presently flies a fleet of A330s, A320s, A321s, 737s and BAe 146s.

AEROFLOT RUSSIAN AIRUNES: Last year was a very good one for Aeroflot. Although traffic declined by some 8%, this was due to a management decision to cut unprofitable services and resulted in net profits more than doubling. The carrier also negotiated a rollover of the 27 Western passenger aircraft free of standard heavy taxes. New A319s/A320s will start to join the fleet in October and will result in significantly lower lease costs.

AERO LLOYD: Boasting a German market share of about 12%, Aero Lloyd transported 3.5 million passengers last year with its short- and medium-range jets as the leading independent German charter carrier. Unlike competitors such as LTU, Hapag-Lloyd and Thomas Cook Airlines, it is unaffiliated with any tour-operator conglomerates.

Aero Lloyd is deploying its 174-seat A320-200s and 210-seat A321-200s to 50 vacation destinations from Germany and Austria.

AIR ATLANTA ICELANDIC: Operating a fleet of 747s and 767s on ACMI leases for carriers seeking additional lift, Air Atlanta was taken over early this year for an undisclosed sum by Pilot Investor S.A. "This is good news for the airline," declared President and CEO Hafthor Hafsteinsson. "We are a $200 million business and have been looking for ways to inject more capital into the balance sheet. It will give us the security to fund expansion without losing our essential Icelandic identity."

Pilot Investor, a group headquartered in Luxembourg but owned by Icelandic investors, acquired 50.5% of the shares in the wet-lease specialist. Lead investor Magnus Thorsteinsson, an Icelandic entrepreneur, joins the board. Pilot Investor said it secured the entire 22.7% stake owned and controlled by Icelandic banking concern Bunadarbanki Islands together with further shares held by the airline's chairman and founder, Arngrimur Johannsson, a 747 pilot, and his wife, Thorn Gudmundsdottir-Johannsson. The pair will retain their leadership positions.

The carrier, founded in 1986, employs up to 1,400 staff during peak times and more than 200 pilots. Profits are expected for the current financial year to follow the 2001 net profit of 150 million Icelandic kronur ($1.72 million).

AIR BERUN: The airline said it boosted revenue 22.5% to [euro]696 million in 2002 while increasing passenger numbers 20% to 6.6 million. Profit figures were not released by the privately owned carrier, which said its 1,650 employees received a year end [euro]1,500 bonus plus a cash premium equivalent to an additional month's salary.

Boullioun Aviation Services delivered an additional 737-800 on medium-term lease. The airline reportedly aims to add 50 single-aisle airplanes by 2007.

Air Berlin has grown its network from Dusseldorf-Moenchengladbach and Berlin Tegel. New routes include Nuernberg-Vienna and Hamburg services to Bergamo, Rome and Zurich. A Dortmund-Zurich route also was started May 1. All-inclusive fares start at [euro]29 and include snacks and nonalcoholic beverages.

AIR EUROPA: Spain's third-largest airline signed a codesharing and loyalty agreement with KLM last summer. At the end of October it took delivery of a new 737-800 from Boullioun Aviation Services. As part of the long-term lease transaction, Boullioun agreed to early termination of leases for two 737 Classics that were placed with new customers. Air Europa's 2002 revenue fell 13.8% from 2001 and passenger totals decreased 8.6%.

AIR FRANCE: The flag carrier continued its growth and became Europe's largest airline measured by traffic--or at least equal to British Airways--with a 17.6% market share of European carriers' RPKs compared with 16.9% last year based on AEA figures.

Moreover, AF's progress did not come at the expense of its profitability. For the sixth consecutive year, and despite the economic downturn, Iraq and SARS, Air France Group posted a net profit of'[euro]120 million for the year ended March 31. Operating profit, excluding aircraft disposals, rose 3.2% to [euro]162 million.

Internal labor unrest returned after years of peace due to pilot pay negotiations and the upcoming privatization. The French state currently holds 54% but intends to reduce its shareholding, keeping around 20%. About 20% will be offered to employees. Shareholders, including the state, could give the go-ahead at the annual meeting July 10, though an offering may not take place until fall.

In response to the uncertain economic and geopolitical climate, AF in late 2002 announced a package of emergency cost-cutting measures including a hiring freeze, a [euro]400 million cut in capital expenditure in FY03 and postponement for a year of eight aircraft deliveries, including two RJs. Its summer 2003 schedule increased capacity only 1.8%.

At end of January, AF and Alitalia agreed that each would hold a 2% equity position in the other, "reflecting the determination of Alitalia and Air France to build a long-term partnership while strengthening ties among the European airlines in the SkyTeam alliance." The European Commission is still reviewing the cooperation agreement.

In May AF retired its Concorde fleet. The Concorde operation dragged down profits by about [euro]50 million in the most recent fiscal year.

AIR LIB: Despite desperate efforts to survive, including the launch of domestic low-cost flights under the Air Lib Express banner, a government commitment to lend it [euro]50 million and last-minute takeover talks with Dutch Group IMCA, the French carrier was put into liquidation on Feb. 17. A parliamentary inquiry was launched into the reasons for the default of France's second-largest airline, which left more than $137 million in public debts in its wake. Air Lib's departure was a boon to Air France, which not only was rid of a low-fare competitor but also scooped up a good portion of the airline's valued slots at Paris Orly, giving AF more than 50% of the slots.

Air Lib's former chairman, Jean-Charles Corbet, told a French parliamentary commission of inquiry that he acted in the best interests of Air France when he acquired the former AOM-Air Liberte in July 2001. "The idea behind the acquisition was to sort of ensure that AF did not get a competitor next to it, but rather a company which enabled it to continue operating and expand without constrictions. In my eyes, AF's life was not possible with a massive arrival of [competitors such as] easyjet and Ryanair."

AIR MALTA: Boosting frequencies to key destinations and introducing five new routes with its summer 2003 flight schedule, the airline widened its network to 46 cities served by a fleet of A320s and 737s. New points are St. Petersburg, Madrid, Helsinki, Bucharest and Porto. Services linked to Heathcrow, Gatwick, Stansted and Manchester maintain the lion's share of the schedule.

Earlier this year Air Malta concluded a multimillion-dollar accord with ILFC, Airbus and CFMI to renew its fleet over a four-year period. Included are the sale and leaseback from ILFC of the airline's two owned A320-200s and three 737-300s and lease of 12 new A320-family aircraft for 12 years.

AIR NOSTRUM: Based in Valencia, the Regional is part of Iberia Group serving domestic and international routes with more than 150 interline agreements. In June it expanded by adding direct flights between Barcelona and Hamburg and a daily direct flight to Paris from Alicante and Santiago de Compostela. It flies F50s, ATR 72s and CRJs.

AIR ONE: The privately owned Italian carrier was able to increase its RPKs in 2002 by 86.5% on the previous year and grow total passenger numbers 84% and passengers on scheduled services 91% while posting a positive net result. Last summer Air One signed a codeshare agreement with Air Littoral and in February it started codesharing with Air Canada to Toronto. The airline has appealed to the EU Court of First Instance against Alitalia's [euro]1.43 billion capital increase, which was authorized June 2002 by the European Commission.

AIR 2000: The in-house carrier of First Choice Holidays, which supplies two-thirds of First Choice's passengers, added three new 757s this spring to its fleet, which is undergoing a corporate re-branding with new livery and jade-colored leather seats. Concurrently, Air 2000 unveiled a new look for its 1,500 cabin and ground crew and opted to upgrade all aspects of onboard service starting this summer.

As the UK's third-largest leisure airline, it typically operates service to Sanford, Fla., from London, Manchester, Birmingham and Glasgow using 767-300ERs. It flies from 15 regional airports in the UK and Ireland, carrying more than 7 million passengers annually to more than 50 destinations worldwide.

ALITALIA: According to Chief Executive Francesco Mengozzi, Italy's flag carrier must "integrate and consolidate with other carriers... to develop cost and revenue synergies" in order to survive the industry downturn. Mengozzi, reappointed to his post in May for another three years, said privatization of Alitalia is "inevitable" and called on the treasury ministry, which controls 62% of the company, to sell shares to the public, which the government said it plans to do by year end. …

Log in to your account to read this article – and millions more.