AEA sees European airlines losing €1.5bn in 2012

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Europe's struggling carriers will post aggregate pre-tax losses of €1.5 billion ($1.84 billion) for full-year 2012, according to the latest forecast by the Association of European Airlines (AEA).

Issuing the group's first-half traffic report, Athar Husain Khan, AEA acting secretary general, says European carriers are unable to pass on higher fuel costs due to the continent's economic crisis.

"European airlines are taking their responsibility to overcome the current challenges," Khan says. "But they need a fertile soil in order to strengthen their positions in the global playing field, and to accelerate their contribution to the much-needed recovery of Europe's economy."

First-half passenger numbers increased 3.4% year-on-year to 178 million, AEA notes, though the combined impact of the Japanese tsunami and civil unrest in the Middle East is likely to have depressed the 2011 figure.

Traffic growth as measured in RPK was even stronger at 5.5%, against ASK capacity growth of 2.7% for the first two quarters. This tight capacity management pushed up passenger load factor by 2 percentage points to 77.1%.

But the Eurozone crisis undermined the flexibility of regional pricing models, AEA says, adding: "The market is clearly not able to absorb higher fares due to the challenging situation of the European economies ... Airlines are confronted with worsening financial results as surging fuel costs have erased their profitability."

Air cargo - widely seen as a bellwether of economic fortunes - also under-performed in the first half, with total freight tonne kilometres falling 4.9% year-on-year.

In June, IATA nearly doubled its forecasted 2012 losses for European carriers from $600 million to $1.1 billion, again citing economic uncertainty caused by the Eurozone crisis. It added that "poorly thought-out regulations" - a thinly veiled reference to the EU Emissions Trading System (ETS) - contributed to the weak outlook.