Improvement has been slow for the airline industry’s financial results. In many cases, reducing the size of their loss is the best an airline could report in a year-on-year comparison of their first quarter results.
SAS Group, parent of Scandinavian Airlines, reported a first-quarter loss of SEK 1.06 billion ($145 million), slightly worse than the SEK 971 million loss in the same period a year earlier. SAS officials noted that the first months of the year are always a challenge for airlines due to lower leisure and business travel, but SAS was also hit by a pilot walkout that led to flight cancellations in Norway and Denmark. That disruption cost the airline an estimated SEK 250 million ($34.3 million). “Further cost cutting needs to be done to ensure long-term competitiveness,” said Jorgen Lindegaard, president and CEO.
Korean Air more than doubled its first-quarter profit based on increased passenger and cargo demand and a stronger Korean Won. Its net profit was 127 billion Won ($136 million) vs. 59 Won in the same quarter a year ago. “Fuel costs remained at a high level, yet we were able to offset these and keep the increase in operating expenses at a reasonable level by lowering maintenance and rental expenses,” said Jong-Hee Lee, president.
Singapore Airlines Group’s record revenues and a commitment to cut costs helped its fiscal-year performance. The airline reported a S$1.24 billion ($793 million) profit for the fiscal year ended March 31. Revenues were up 11.1% for the period and expenditures rose 13.4%, with fuel accounting for 35% of those costs (compared with 25.2% in the prior year).
UAL Corp., parent of United Airlines, reported a loss of $306 million in the first quarter. The results are the first reported since the company exited Chapter 11 bankruptcy protection and exclude bankruptcy-related items. UAL itself reported earnings of $22.9 billion for the first quarter vs. a $223 million loss the prior year.
Finnair Group announced a cost-cutting plan to provide annual savings of 80 million Euros ($102.7 million). The program is a response to a first quarter loss of 3.8 million Euros ($4.9 million). The company had reported a 12.2 million Euro ($15.7 million) profit in the same period a year ago.
TAM, Brazil’s leading airline, reported net income rose 107.9% for the first quarter to R$ 111.2 million ($53.2 million) on a 24.6% rise in revenues. The company had a successful initial public offering of shares during the quarter that raised R$ 1.5 billion ($717 million).
Japan Airlines Group posted a 47.2 billion yen ($428 million) loss in its fiscal year that ended March 31st. This compares with earnings of 30 billion yen for the prior fiscal year. Sluggish traffic growth and anti-Japanese sentiment in China were added to rising fuel costs as reasons cited for the reversal.
Northwest Airlines reduced its losses in the first quarter when bankruptcy-related charges are excluded. The bankruptcy-related costs of $975 million drove a net loss of $1.1 billion for the first quarter, a marked increase over the $537 million loss posted for the period a year earlier. But when bankruptcy-related costs are excluded, Northwest trimmed its first-quarter loss from $450 million in the 2005 first quarter to $129 million in the current period.
Lufthansa Group narrowed its first-quarter net loss to 98 million Euros ($126 million) vs. 116 million Euros in the prior year’s first quarter.
American Airlines requires at least $1 billion in annual savings to keep pace with competitors who are restructuring under bankruptcy protection, according to Gerard Arpey, chairman and CEO. Arpey said United, Northwest, Delta and US Airways, “leveraged marketplace failure to reduce their costs.”
US Airways Group said its merger of America West Airlines and the former US Airways helped it post a first-quarter profit of $64 million. It expects to remain profitable for the year.
TNT Express, part of TNT, reported a 30.5% increase in operating income to 124 million Euros ($159 million). Parent TNT reported first quarter net income rose 6.2% to 205 million Euros ($263 million).