Lufthansa profit warning spooks European airline sector

Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations. (AFP)
Updated 17 June 2019

Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.


Saudi female student pilot aims high with flying ambitions

Updated 19 November 2019

Saudi female student pilot aims high with flying ambitions

  • Amirah Al-Saif is among the first batch of 49 female students

DUBAI: Saudi women aiming to emulate Yasmeen Al-Maimani’s feat, the Kingdom’s first female commercial pilot, now have that opportunity as Oxford Aviation Academy has opened its doors for them to take flying lessons and earn their licenses.

One those women raring to earn her pilot wings is 19-year-old Amirah Al-Saif, who enrolled in the aviation academy to fulfill her dream of flying for the Kingdom’s national carrier Saudi Airlines (Saudia).

“They have been very supportive of us females,” Al-Saif, who hails from Riyadh, told Arab News at the sidelines of the Dubai Airshow, when asked about her experience at the academy.

Al-Saif is among the first batch of 49 female students, with six of them already in ground school, expected to receive their licenses by the start of 2021 after a grueling course that requires them to first learn English, Mathematics, Physics and other basic knowledge subjects.

She is also the first in the family to have an interest in the aviation industry.

Student pilot Amirah Al-Saif, right, who hails from Riyadh, is the first in the family to have an interest in the aviation industry. (Supplied)

Those who pass the foundation program can then move on to ground school for practical lessons and ideally graduate in two years with three licenses: the Private Pilot License, Instrument Rating and Commercial Pilot License.

Al-Saif considers herself lucky since she was not constrained take courses abroad for her pilot training, unlike Al-Maimani who had to leave the Kingdom to receive her license, as well as wait for a long time before being eventually hired by Nesma Airlines.

The flying school is located at the King Fahd International Airport in Dammam and is an authorized branch of Oxford Aviation Academy based in the UK.

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