Calendar fourth-quarter results for Asian and European airlines could hardly tell the recovery story more succinctly. A snapshot of results for seven Asian carriers and eight European operators shows $1.65 billion wiped off net losses in the three months ending December 2009, compared with the same period in 2008. Yet these 15 carriers still racked up net losses of more than $900 million.
The figures equally illustrate a market climate where Asian economies have been leading the pace of recovery, while those in Europe lag behind. Of the $908 million loss incurred by these 15 carriers, all but $3 million of this came from European operators. Small wonder then that IATA now expects the Asia-Pacific carriers to be the most profitable in 2010 and those in Europe to endure the biggest losses.
Further colouring the picture, the vast majority of the losses from this European sample are from network carriers. Take out low-cost carriers Norwegian, Ryanair and Vueling from this sample, and losses of $870 million are split across five airlines, showing how tough it has been, and remains, for European network carriers.
So, while European airlines struggle, their counterparts in Asia are starting to reap the benefits of a faster than anticipated recovery. All but two of the seven Asian carriers in this sample recorded profits for the calendar fourth quarter; the Japanese pair of ANA and Japan Airlines proving the exception. It also helped carriers return to or improve profits for 2009. For example, one of the hardest hit Asian carriers, Cathay Pacific, recovered from a net loss of $1.09 billion in 2008 to a profit of $628 million in 2009.
"While we welcomed the improvement in business in the latter part of 2009, we remain cautious about the prospects for 2010," said Cathay chairman Christopher Pratt on announcing the results. "Revenues and yields remain below levels experienced prior to the recent downturn and there has not yet been a sustained improvement in premium passenger demand."
IATA chief economist Brian Pearce notes: "We are seeing, and expect to continue to see, the strongest growth with travel in Asia and some of the other markets, and that is likely to lead to a larger rise in fares. In Asia we may see double the average [growth rise]. But that rise still doesn't take us back to where we were in 2008, particularly for premium fares."
The region's carriers are also being boosted by the improved cargo picture. Indeed, IATA in its forecast for the region points to freight markets being particularly strong, with long-haul cargo capacity for shipments originating in Asia experiencing a capacity shortage. It thus expects cargo demand to grow 12% in 2010.
Source: Airline Business