Airline losses set to swell

AER Lingus and Ryanair are bucking the trend as European airlines’ losses are expected to widen to as much as $2.5 billion in 2003, it emerged yesterday.

European airlines will post losses of between$1 billion and $2.5 billion this year as fewer people fly, said David Henderson, a spokesman for the Brussels-based Association of European Airlines, which represents 30 airlines. Losses amounted to $900 million in 2002 and $3 billion in 2001, Mr Henderson said.

“At this stage of the year, we have a range of outcomes from bad to approaching the worst ever,” said Ulrich Schulte- Strathaus, the association’s secretary general, in an e-mailed statement.

The world’s airlines will lose $10 billion this year because of severe acute respiratory syndrome, or SARS, and the Iraq war, according to the International Air Transport Association (IATA). Global air traffic fell 18.5% in April according to IATA, which represents more than 270 airlines worldwide.

As both Aer Lingus and Ryanair posted profits for last year, British Airways Plc, Europe’s largest carrier, said its fiscal fourth-quarter net loss tripled to £133 million from £43 million pounds. The carrier is accelerating a 23% cut in its workforce and grounding planes including its Concorde fleet to lower costs.

Deutsche Lufthansa AG, Europe’s third-largest carrier, said its quarterly loss almost doubled to €356 million as average revenue per passenger fell 12.5% after Lufthansa cut fares to try and win more passengers. Air France SA, Europe’s second-largest airline, reported a fourth-quarter loss of €98 million as yield dropped 2.3%.

European airlines’ passenger traffic on Asian routes plummeted 31% in the week ended May 18, the steepest decline this year, as the spread of severe acute respiratory syndrome, or SARS, deterred people from flying.

International passenger traffic fell 9.5% from the comparable week in 2002, the AEA said. Travel across the North Atlantic dropped 4.5% while traffic on routes to the Middle East declined 3.5%. Traffic on European destinations fell 7.9%.

“Figures across the North Atlantic are dismaying,” Mr Henderson said.