JUSTIN WASTNAGE / LONDON
Two of Europe's largest flag carriers, British Airways and Lufthansa, are forecasting profits for the year after strong interim results on the back of successful cost-cutting programmes.
BA made a pre-tax profit of £245 million ($383 million) for the three months to September and expects to return a profit for the full year, while Lufthansa has exceeded its forecast for the year within the first nine months with a profit of €790 million ($788 million). The majors' improved performance comes as Irish low-cost operator Ryanair continues to prosper, reporting a 71% rise in net profits over the past six months, higher than expected, largely due to strong performance in Lufthansa's home market.Lufthansa's profits were up by 172% on the same period last year, on revenues up 2.7% to €12.6 billion. Net profit rose four-fold from €65 million to €344 million, leading the airline to revise its profits forecast for the year by €250 million to €750 million.
The airline has cut its operating costs by €16 million to €27 million, but labour costs have risen by 8.2% and Lufthansa chairman and chief executive Jürgen Weber warns that several large pay claims "represent a risk" to profits.
BA's pre-tax profit for the six months rose to £310 million from £45 million last year, despite second-quarter revenues falling 6.5% to £2.1 billion. The strong performance was attributed to the Future Size and Shape cost-cutting programme, which has resulted in a 15% drop in operating expenditure in the quarter to £1.85 billion, with more than 8,000 jobs cut to date and a total of 13,000 to go by 2004.
Ryanair, meanwhile, reported profits after tax of €150.9 million on revenues of €464.6 million for the period ended 30 September. Traffic growth of 37% to 7.84 million passengers and cost savings have contributed to the better-than-expected figures. The carrier says these figures are "exceptional" and issued a cautious forecast for the full year, up from €200 million to €230 million, due to higher costs associated with opening a base at Milan Bergamo.
Chief executive Michael O'Leary says, after the launch of its Frankfurt Hahn base, growth in Germany has been faster and fare competition less aggressive than expected.Lufthansa has acquired 10% more of BMI British Midland, taking its stake in its Star Alliance partner to 30%. Fellow Star carrier Scandinavian Airlines holds 20%, with BMI chairman Michael Bishop holding 50%, plus one share.
Source: Flight International