AIRLINE NEWS
Tuesday, July 08, 2008
Air France-KLM Trims Capacity Growth Plans
Air France-KLM Monday responded to soaring fuel costs by scaling back its capacity growth expectations for this winter and next summer, although it's still faring better than many of its U.S. and European rivals.
In a press release, the world's biggest airline by revenue said it now expects capacity for both this winter and next summer to be 2% up on the year. It didn't say what its previous expectations were, but a spokeswoman told Dow Jones Newswires it had cut back on its planned capacity expansion in response to higher fuel bills.
The move came amid speculation that Air France-KLM would have to follow the lead of many of its rivals and cut capacity from this fall in response to record fuel prices and weakening economies. In Europe, several airlines, including big rival British Airways, have said they will cut capacity. U.S. airlines have been even more drastic. American Airlines plans to cut 12% of capacity in the fourth quarter.
On the back of soaring oil prices, jet fuel prices have shot up to over $1,300 a metric ton from $850 a ton at the start of the year. Fuel is now typically either the top or second-highest single cost item for network airlines, representing some 34% of the cost base, according to the International Air Transport Association.
The trade body last month warned that airlines could turn in a combined net loss of $6.1 billion this year if the oil price remained at $135 for the rest of the year or a loss of $2.1 billion at an average 2008 price of $107.
Despite the planned capacity cuts starting this fall, many airlines are still enjoying passenger growth this summer. U.S. airlines last week reported passenger growth in June as travelers made good on their summer vacation plans, and several of Europe's big carriers Monday also reported growth.
Air France-KLM said traffic in June, measured in revenue passenger kilometers, was up 2.6% on the year. The number of passengers carried rose 1.3% to 6.8 million, from 6.7 million, although its load factor, a measure of how full seats were, fell to 81.5%, from 82.7%, because capacity was up 4.1%.
The Franco-Dutch airline said last year's figures had been boosted by two important trade shows in Paris, while this year's figures were hit by an air traffic control strike at Paris Orly airport.
Its cargo operations fared less well, with traffic down 1.5% and capacity up 1.8%.
One of Europe's major short haul budget airlines, easyJet, said it carried just over 4.1 million passengers in June, compared with 3.4 million a year earlier. The 19.5% rise is due mainly to the acquisition of GB Airways from British Airways, but analysts said the figures were solid.
The carrier's load factor rose slightly to 86.9%, from 86.8% a year earlier. It said that total revenue per seat continues to improve and nearly 70% of seats for the second half of this year have already been sold.
Irish airline Aer Lingus, meanwhile, said it carried 7.6% more passengers on the year in June, with short haul numbers up 7.8% and long haul numbers up 6.7%. Load factors fell slightly, to 81.% on short haul and 82.1% on long long haul, but the airline had increased capacity 13.8% and 12.8% on the year, respectively.
Source: money.cnn.com
In a press release, the world's biggest airline by revenue said it now expects capacity for both this winter and next summer to be 2% up on the year. It didn't say what its previous expectations were, but a spokeswoman told Dow Jones Newswires it had cut back on its planned capacity expansion in response to higher fuel bills.
The move came amid speculation that Air France-KLM would have to follow the lead of many of its rivals and cut capacity from this fall in response to record fuel prices and weakening economies. In Europe, several airlines, including big rival British Airways, have said they will cut capacity. U.S. airlines have been even more drastic. American Airlines plans to cut 12% of capacity in the fourth quarter.
On the back of soaring oil prices, jet fuel prices have shot up to over $1,300 a metric ton from $850 a ton at the start of the year. Fuel is now typically either the top or second-highest single cost item for network airlines, representing some 34% of the cost base, according to the International Air Transport Association.
The trade body last month warned that airlines could turn in a combined net loss of $6.1 billion this year if the oil price remained at $135 for the rest of the year or a loss of $2.1 billion at an average 2008 price of $107.
Despite the planned capacity cuts starting this fall, many airlines are still enjoying passenger growth this summer. U.S. airlines last week reported passenger growth in June as travelers made good on their summer vacation plans, and several of Europe's big carriers Monday also reported growth.
Air France-KLM said traffic in June, measured in revenue passenger kilometers, was up 2.6% on the year. The number of passengers carried rose 1.3% to 6.8 million, from 6.7 million, although its load factor, a measure of how full seats were, fell to 81.5%, from 82.7%, because capacity was up 4.1%.
The Franco-Dutch airline said last year's figures had been boosted by two important trade shows in Paris, while this year's figures were hit by an air traffic control strike at Paris Orly airport.
Its cargo operations fared less well, with traffic down 1.5% and capacity up 1.8%.
One of Europe's major short haul budget airlines, easyJet, said it carried just over 4.1 million passengers in June, compared with 3.4 million a year earlier. The 19.5% rise is due mainly to the acquisition of GB Airways from British Airways, but analysts said the figures were solid.
The carrier's load factor rose slightly to 86.9%, from 86.8% a year earlier. It said that total revenue per seat continues to improve and nearly 70% of seats for the second half of this year have already been sold.
Irish airline Aer Lingus, meanwhile, said it carried 7.6% more passengers on the year in June, with short haul numbers up 7.8% and long haul numbers up 6.7%. Load factors fell slightly, to 81.% on short haul and 82.1% on long long haul, but the airline had increased capacity 13.8% and 12.8% on the year, respectively.
Source: money.cnn.com
Labels: Air France-KLM
