Flying would never return to the old level after corona, it was predicted. The summer of 2022 proved the opposite, at least in a financial sense.
Repaid state aid and better results than in the relatively carefree pre-corona summer of 2019: European airlines seem to have fully recovered from the pandemic after last summer. Even skyrocketing petroleum prices, ongoing staffing problems at some major airports, galloping inflation and ongoing corona lockdowns in China cannot damage the quickly regained confidence.
- European aviation consumed all corona worries last summer
- Many airlines were already doing better than in the last pre-corona summer 2019
- Many airlines have already repaid the corona state aid
- There is hardly any fear of an impending recession: Both Lufthansa and British Airways’ parent company AIG are raising their profit forecast for the rest of the year.
As the largest airline in Europe, Ryanair proved again on Monday how amazing the past summer season was. The low-cost car carried 11 percent more passengers than in the summer before corona 2019 and managed to make these travelers pay an additional 14 percent higher ticket prices. This led to a tripling of revenue over the past six months to 6.6 billion euros and a profit of 1.37 billion euros.
This makes Ryanair the best performing large airline in Europe. This is largely due to its strategy of not cutting the workforce during the corona crisis, unlike many other European airlines. This allowed the Irish low-cost fighter to take full advantage of the exploding demand for flights following the lifting of the corona restrictions at the beginning of this year.
At the same time, the slow-start delivery of hundreds of new Boeing aircraft has reached cruising speed. Last year, 73 new planes arrived. One more aircraft will be added each week for the next six months, bringing the fleet to 124 new Boeings by next summer.
There is also no one who imitates Ryanair in terms of their aircraft’s load factor. While all European airlines are currently very happy with less than 20 percent of seats remaining empty on an average flight, Ryanair achieved an occupancy rate of 94 percent last summer. This is especially important because in aviation the maxim is that a flight is only profitable if more than three-quarters of the seats are full.
In addition, Ryanair also considers itself more recession-proof than its competitors. Chief executive Michael O’Leary expects to be able to limit the classic winter season losses for the rest of Ryanair’s financial year, which runs until March 31. As a result, the annual profit would amount to 1 to 1.2 billion euros. The budget carrier hopes to welcome 168 million travelers, a slight increase on the previous forecast.
Consumers are not stopping flying, they are just more aware of the price. Like Aldi, Lidl or IKEA, we will gain market share in this climate.
O’Leary: ‘Concerns about the impact of a recession on our business model are greatly exaggerated. Consumers are not stopping flying, they are just more aware of the price. And like Aldi, Lidl or IKEA, we will gain market share in this climate.’
And Ryanair benefits from its focus on the European market, which means it is not affected by the still lagging demand for flights to the Far East. Air traffic to China in particular is lagging behind due to Beijing’s zero-tolerance policy towards corona and the associated strict shutdowns.
Higher earnings expectation
This does not change the fact that the other major European airlines have now also processed the corona boom. Brussels Airlines’ parent company Lufthansa last month raised its profit forecast for the full year after operating profit for the summer of 1.1 billion euros turned out to be more than twice as high as the German group itself had expected.
AIG, the group of companies such as British Airways, Iberia, Vueling and Aer Lingus, also raised its profit forecast for the rest of the year after the summer, despite all the staff shortages at British airports and the associated cancellations of thousands of flights, rose slightly. Passengers were transported in the summer of 2019.
At Air France-KLM, even the structural problem child Air France took care of the beautiful weather. The Corona clean-up has made the French state-owned company a lot leaner. In addition, Air France took advantage of the French government’s commitment to cancel all domestic flights from Paris-Orly to destinations reachable by TGV in a maximum of 2.5 hours. These flights from, among others, Paris to Lyon, Bordeaux and Nantes were structurally unprofitable, and the remaining aircraft could be deployed on profitable routes.
The billions in state aid that governments had to give their airlines in the full corona crisis have already largely been repaid. KLM and Lufthansa already paid out their bailout billions at the beginning of this year. After this summer, Brussels Airlines announced that it would repay the 290 million euros in state aid and the two associated government representatives on the board by the end of this year.
At the same time, the Belgian airline, which has been reduced by a quarter, is working again with growth plans. While planes were scrapped during corona, a few new planes were added this summer. CEO Peter Gerber sees growth in the prestigious destinations to East Africa in particular.
Air Belgium is significantly cutting back on the offer
Air Belgium will cut deeply in its offer at the beginning of next year. The Belgian-Chinese airline is canceling almost all flights to the Antilles due to high fuel prices.
Due to the increased costs, the airline was already forced to reduce capacity in the summer and combine flights to different destinations: those to the French islands of Guadeloupe and Martinique, and those to Punta Cana in the Dominican Republic with those to the Dutch island of Curaçao. .
Now society goes a step further. She criticizes that fuel prices in the Dominican Republic are more than half as high and passenger taxes are three times higher than in Brussels. On top of this comes the depreciation of the euro against the dollar. In addition, the airport in Punta Cana obliges passengers bound for Curaçao to disembark and re-embark, which means that they are also charged taxes.
Until mid-January, Air Belgium will schedule one or two more flights to Curaçao and Punta Cana. The company then suspends the connection, except during the spring break in February and March. It has not yet been decided whether the destinations will again be included in the summer offer. The Dutch island of Bonaire, which is also served from Brussels with a triangular connection via Curaçao, also disappears from the timetable.