Cimber Sterling

UK carriers rush to snap up bmibaby’s planned route closures

British Airways (BA) is preparing to disband bmibaby, the low-cost unit it unwelcomely acquired from bmi after previous owner Lufthansa failed to find a buyer. But as the saying goes: one man’s meat in another man’s poison and the news of bmibaby’s grounding was welcomed by multiple airlines including Monarch, Flybe and Jet2.com, all of which are swiftly stepping in to backfill capacity.

Anemic-turns-dynamic is not exclusive to bmibaby’s network but a development seen following the recent demise of other small- and medium-sized airlines in Europe such as Spanair, Malev and Cimber Sterling. In those cases, competitors have reacted swiftly and within a couple of days to fill the void.

bmibaby’s closure is indicative of a recent development in Europe: the lavish injection of capital in loss-making carriers is coming to a standstill with public and private shareholders alike halting the operations of these entities, mostly small- and medium sized airlines, a trend long overdue and induced by low or no economic growth in most EU countries implementing stark austerity measures, and high fuel prices.

Bankruptcy of Denmark’s Cimber Sterling will leave no long-lasting network gaps

Several airlines have moved quickly to fill the void left by the grounding last week of Cimber Sterling, although not one specific carrier will make major inroads. The LCC/regional operator accounted for only about 8% of seat capacity in its Danish home market and the market is highly fragmented. SAS is the largest carrier in Denmark and provided about one third of total seat capacity prior to Cimber Sterling’s bankruptcy while Norwegian Air Shuttle is the country’s second largest airline, with about a 14% share of capacity (seats), according to data from Innovata.  

Copenhagen Kastrup Airport is Norwegian’s third largest base in terms of weekly seat capacity after Oslo and Stockholm Arlanda. It was the first airline to take the plunge and open a base at Copenhagen when Sterling went bankrupt in 2008. Cimber Sterling’s failure will create opportunities for Norwegian to further build its Copenhagen base with additional Boeing 737s and increased frequencies on routes on which it competed with Cimber Sterling such as Barcelona, Malaga, Nice, Prague and Rome Fiumicino. Even before the grounding of Cimber Sterling, Norwegian had planned to base more aircraft at Copenhagen as of Jun-2012.

European airline traffic and load factors up in Sep-2011, but outlook mixed for major carriers

European carriers continued to post year-on-year gains in passenger numbers and load factors across their short-haul networks in Sep-2011, with a few exceptions. Europe has posted surprisingly strong traffic results throughout 2011, in spite of weaker local business and consumer conditions. IATA (which represents only full-service carriers) noted in Aug-2011 that “cross-border travel within Europe has held up remarkably well”.

The good times continued to roll for most short-haul carriers in Sep-2011. On the earnings side, however, the outlook is mixed, with several European airlines expanding on their short-term expectations over the past month.

European airlines post healthy traffic gains in Jul-2010. Will the summer be strong enough?

European airlines have been quite liberal with their capacity in 2011, even in the face of economic uncertainty and high fuel prices. The trend continued this summer and carriers have, on the whole, enjoyed strong traffic and load factor gains. But will it convert into profitability?

European carriers trending in right direction in first summer month

Europe’s major airlines have made a good start to the northern summer, with strong gains in load factors across the board and almost all carriers reporting year-on-year increases in passenger numbers.