Fleets and Aircraft

easyJet's reduced loss in 1H2012 reflects brighter skies and higher seat revenue

easyJet blew a kind wind through the cloudy European sky as it reported a better than expected net loss of GBP90 million for the six months ended 31-Mar-2012, despite increased fuel costs and the increased UK Air Passenger Duty (APD). Net loss for 1H2012 reduced 21.5% on the year-ago period on a 5.4% rise in passengers carried and a 15.7% growth in total revenues.

The good performance of Europe’s second largest LCC in terms of passengers carried contrasts with the worsening operating results of its full service peers like Lufthansa Group and Air France-KLM Group, which were not able to absorb spiralling fuel expenses, notwithstanding increased passenger traffic and higher passenger unit revenue in their most recent 1Q2012.

The financial year of easyJet differs from Lufthansa and Air France-KLM’s which both have the calendar year as their financial year.

Poland’s OLT Express plans international expansion

Poland’s OLT Express is gearing up for international expansion with a range of new destinations to be launched from winter 2012/13, tripling its network. The airline will also be almost doubling its fleet in order to serve its new Western European network. The international expansion will be aimed at taking market share from LOT Polish Airlines from secondary cities in Poland which have traditionally been served through LOT’s Warsaw hub.

OLT Express has been in operation since 2001, originally under the name of Jet Air. From winter 2005/06 until mid-2007 the airline operated domestic services for LOT Polish Airlines on low density routes. JetAir’s regional feeder partnership with LOT ended in 2007 and the carrier began to operate services under its own name. OLT Express’ sister carrier, OLT Express Poland, was formerly a Polish charter operator which commenced operations in Apr-2011, serving regional Polish destinations on behalf of tour operators.

As A380 continues to be restricted in India, Lufthansa to deploy 747-8 to Delhi and Bangalore

Two of the first destinations for Boeing 747-8 launch operator Lufthansa will be Delhi and Bangalore, notable as the 747-8 will have the largest capacity in Lufthansa's fleet after its A380, which India has not yet permitted foreign airlines to operate with. Lufthansa serves Delhi with daily 747-400 and A340-600 service while Bangalore sees daily 747-400 service. With Lufthansa utilising 46 of the 50 weekly frequencies available to German carriers (Lufthansa is currently the sole operator to India) and the Germany-India bilateral unlikely to be expanded in the near future, the deployment of larger aircraft is Lufthansa's main mechanism to expand in the growing Indian market.

Europe-India services will grow in the near future with British Airways (BA) likely to expand in India following International Airlines Group (IAG), its parent company, acquiring bmi, which has bestowed IAG with 42 London Heathrow slots. The Lufthansa Group of airlines is the largest European airline group serving India while IAG is a distant second and Air France-KLM third.

Transaero seeks services to France and Italy following expanded bilateral agreements

Transaero is continuing to encroach on Aeroflot’s territory with the recent expansion in capacity as part of revised bilateral agreements between the Russian Federation and Western Europe. Traditionally, Aeroflot, as the Russian flag carrier, was the only airline allowed to operate key international routes from Moscow, however, this is beginning to change with expanded bilateral air services agreements with other nations that allow for a second carrier to compete on particular routes. Most recently Russia’s Federal Air Transport Agency held negotiations with Italy and France for the liberalisation of air services, which will see each country allowed to have a second carrier compete on key routes.

Pinnacle’s bankruptcy underlies growing weakness of US regional carriers

Pinnacle Airlines’ highly anticipated entrance into Chapter 11 bankruptcy protestion reflects challenges regional airlines in the US face in finding ways to achieve sustained profitability. Delta’s decision to become Pinnacle’s benefactor also shows the complexity of the intertwined relationships between regionals and their mainline partners that foster an unhealthy interdependency.

Pinnacle CEO Sean Menke has been flagging up the possibility of a formal restructuring of the company since late last year when the carrier embarked on an extensive cost-cutting scheme by attempting to gain concessions from employees, restructure supplier contracts and negotiate changes to some of the capacity purchase agreements it has with its major partners to make those deals profitable.

Middle East regional carriers have profitable outlook for 2012

IATA’s latest 2012 industry forecast has airlines in the Middle East as the big winners, with the annual profit forecast for the region's airlines revised from USD300 million to USD500 million. It does come with a caveat though: a spike in oil prices could turn the forecast profit into a USD200 million loss for the region’s airlines.

In 2011, airlines in the Middle East reported a combined annual profit of approximately USD1 billion, according to IATA’s estimate. Despite the regional disruptions and spiralling price of oil, passengers in the region kept flying and Middle Eastern carriers increasingly developed their links with the rest of the world.

As they have been for years, financial results for Middle Eastern carriers were unevenly spread across the region.