Bumpy weather for the airline industry means job cuts to engine maintenance crews in Basel
BASEL, SWITZERLAND – Lufthansa Technik, a subsidiary of the parent of Swiss, the airline, is going on a strict died, restructuring to focus on just one product. The company will cut 82 of its 302-person workforce as a result. The move comes as a result of the high franc and tough airline market conditions, the company said Tuesday 15 May in a statement.
Lufthansa said earlier this month that cost cutting would involve 3,500 jobs worldwide in coming months, due to market conditions.
Lufthansa Technik “will concentrate exclusively on line maintenance, light base maintenance and logistics services for its customers at EuroAirport Basel” it says, and it will discontinue “The labor-intensive technical maintenance of VIP aircraft and the Component Services and Engine Services business will all be discontinued” due to under-utilization, with some job cuts coming before the end of this month.
“The demand for maintenance of regional aircraft and their engines had declined dramatically, and the company was unable to compensate for these disproportionate losses in capacity utilization through its business in the maintenance of VIP and executive jets,” it says.
The company has negotiated with Swiss a deal that may involve 22 staff keeping their jobs, with the Swiss fleet’s engines continuing to be maintained at the engine shop in Basel. The staff would not be working as employees of Lufthansa Technik, however.
GENEVA, SWITZERLAND – Business highlights Wednesday 4 April include:
- Iata, the airline industry organization, says that traffic increased in February, up 8.6 percent for passenger traffic and 5.2 percent for cargo, but it cautions that with petrol prices rising the outlook remains fragile.
- Coty, American beauty company that also owns a number of top clothing brands such as Jill Sander and Adidas, is turning its Versoix office, opened in 2005, into a third international head office, just as the company announced its proposal to buy out Avon, a deal worth $10 billion. The Geneva office the company says in a press release, “will complement Coty headquarters activities in New York, US, and Paris, France.With a goal of further developing cross-divisional and joint headquarters collaboration among Coty professionals, the Geneva office forms a third component in Coty’s corporate headquarters structure. It includes a state-of-the-art research and development group linked to a fragrance center of excellence, global and regional commercial teams for Coty beauty and Coty prestige divisions, procurement and supply chain operations, and a regional Northern European finance center.”
- LeShop published its first quarter results Wednesday, showing a first-ever dip in sales, down 7 percent compared to the previous year: CHF38.5 million. The company notes that sales nevertheless remain strong despite the strong Swiss franc, which is responsible for cross-border shopping tourism. Mobile phones sales continue to grow strongly, up 12 percent, and they now accoount for one in eight purchases.
- Solar Impulse is warming up for a 2,500km solar-powered-only flight to Morocco in May or June, its first venture beyond Europe and over a large body of water, the Mediterranean. The trip will coincide “with the launch of construction in the region of Ouarzazate of the largest thermo-solar power plant ever built.” It will serve as the warmup for a planned 2014 round the world trip using only solar power.
- Roche, Basel-based pharmaceutical company, says it is “very disappointed” by the refusal of the board of Illumina to accept a higher buyout bid and it is now turning to shareholders to ask them to voter 18 April for the takeover.
Switzerland and airlines – Zurich Airport shows strong growth, China Air has Beijing-Geneva project
Airline industry could dip into the red if oil prices continue to rise
GENEVA, SWITZERLAND – “it will not take much of a shock to push the industry into the red for 2012,” says Tony Tyler, chief executive of Iata (International Air Transport Association).
The Geneva-based airline industry group Tuesday 20 March announced a downgrade to its growth forecast for 2012, citing the rise in oil prices.
Iata said in a statement that it “expects airlines to turn a global profit of $3.0 billion in 2012 for a 0.5% margin. This $500 million downgrade from the December forecast is primarily driven by a rise in the expected average price of oil to $115 per barrel, up from the previously forecast $99.
Several factors prevented a more significant downgrade: (1) the avoidance of a significant worsening of the Eurozone crisis, (2) improvement in the US economy, (3) cargo market stabilization and (4) slower than expected capacity expansion.”
Estimated profits for 2011 are now expected to be $7.9 billion, up from an earlier forecast of $6.9 billion, largely due toa “much better than expected performance of Chinese carriers.”
Regional imbalances growing
China Air is reported by RTS public broadcasting to have a project in the pipeline for a direct Geneva-Beijing flight, although it is not yet clear when this will happen. There are currently direct flights from Zurich to Beijing but not from Genev. The new route is one more indication of a trend: growing differences between regions,with Europe and Africa while Asia-Pacific booms.
Last year’s crash rate lowest in aviation history
Airline industry expects 800 million more passengers a year by 2014
Geneva airport in February 2011, getting busier: world airports will need to accommodate strong airline growth in next three years
Geneva, Switzerland (GenevaLunch) – The rate of planes belonging to airlines that crashed in 2010 fell to its lowest level in aviation history but the number of victims rose, Iata (International Air and Transport Association) says.
The 2010 rate was 0.61, equal to one accident for every 1.6 million flights, “a significant improvement over the 0.71 rate recorded in 2009 (one accident for 1.4 million flights)”, Iata says in a press release issued 23 February as part of its annual press day.
The accident rate has been cut 42% since 2001, Iata notes.
A hull loss “is an accident in which the aircraft is destroyed or substantially damaged and is not subsequently repaired. measured in hull losses per million flights of Western-built jet aircraft.”
The organization notes that 2.4 billion people “flew safely” in 2009. There were 23 fatal accidents compared to 18 in 2009, but 786 fatalities compared to 685 in 2009. Africa holds the worst safety record, with a rate 12 times higher than the world average.
Strong growth forecast for Asia
Geneva, Switzerland (GenevaLunch) -European airlines will continue to be the laggards in the airline industry in 2011, Giovanni Bisignani, Iata’s director general and CEO, told journalists at the International Air Transport Association’s annual press day. Profits worldwide for the industry are now expected to end 2010 up $15.1 billion, well above the $8.9 billion forecast in September, but Iata cautions that while the numbers look large, this represents just 1.1 percent of the industry’s revenue for the year.
Iata has also revised upwards its projections for 2011 to a net industry profit of $9.1b, up from the $5.3b forecast in September. Net margins remain weak at 2.7 percent for 2010 and falling to 1.5% percent in 2011, the organization, whose members are the world’s airlines, stated.
Industry remains fragile, “nowhere near covering cost of capital”
Kloten International Airport, Zurich, Switzerland
Geneva, Switzerland (GenevaLunch) – Geneva’s Cointrin International Airport will most likely end 2009 with 2 percent fewer passengers, a figure that is healthier than those most airports will show this year. The figure was provided by Robert Deillon, president of AIG, which manages the airport, in an interview with Swiss wire service ATS. Deillon says that only four months showed drops, while traffic increased by 4 percent each month in October and November, compared to a year earlier.
Zurich’s Kloten airport is expected to show similar figures, says Deillon.
The figures contrast with the bigger industry picture, provided 15 December by Iata (International Air Transport Association) at an annual press conference in Geneva.
Geneva, Switzerland (GenevaLunch) - “In 2009 we’ve not seen big tax increases coming through,” says Jeff Poole, director of airport and industry charges and taxation at IATA (International Air Transport Association) in Geneva. Poole says the big worry now is the Copenhagen climate change conference, with the likelihood that with attention focused on the environment, governments might see an opportunity to raise taxes.
Airports in particular have been good at holding down costs in 2009, a year when the airline industry organization has had on a cost-cutting campaign, with Iata asking airlines, airports and governments to keep charges at current levels or cut them. The industry had its highest-ever “proportion of real cost reductions, 86 percent, $3.02 billion” according to Poole.
Geneva, Switzerland and Kuala Lumpur (GenevaLunch) - Airlines are likely to lose $9 billion in 2009, twice the figure predicted in March, says Iata, the airline industry association. The figure was given by Iata’s director-general and CEO, Giovanni Bisignani, in his state of the industry address at the Geneva-based group’s annual general meeting this week in Kuala Lumpur. He says the revised figures reflect “a rapidly deteriorating revenue environment.” Bisignani pointed out that it took the industry three years to recover after the drop in travel post-September 2001, and that was after a 7 percent fall in reveneus. This time the revenue drop is expected to be 15 percent.
2009: stormy days for airlines
Geneva, Switzerland (GenevaLunch) – Airlines around the world are expected to lose $5 billion in 2008, of which European airlines will lose $1b, a 10-fold drop. Overall, revenues will fall to $501b with losses rather than profits the story in every region except North America, where profits will be less than 1% of revenue.
