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.
Flying in still-troubled skies
GENEVA, SWITZERLAND – Tony Tyler, former chief executive of Cathay Pacific, will succeed Giovanni Bisignani as Iata’s (International Air Transport Association) director general and CEO, effective 1 July 2011, the organization’s member companies voted 7 June.
Tyler steps into a job that won’t get any easier this year, with Iata also announcing this week that it is sharply cutting its forecast for airline profits for 2011 to $4 billion, a 54 percent fall compared with the $8.6 billion profit forecast in March.
Tom Tyler, Iata's new CEO
Giovanni Bisigniani, outgoing head of Iata
It will be a 78 percent drop compared with the $18 billion net profit (revised from $16 billion) recorded in 2010, Iata noted in a statement Monday. “On expected revenues of $598 billion, a $4 billion profit equates to a 0.7% margin.”
Natural disasters, oil prices, unrest creating “unprecedented shocks”
Bisignani handed out the glum assessment. “Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations to $4 billion this year. That we are making any money at all in a year with this combination of unprecedented shocks is a result of a very fragile balance. The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel. But with a dismal 0.7 percent margin, there is little buffer left against further shocks,” the outgoing director says.
Airline profit factors not the same as in 2008
The gloomy picture is not, however, a repeat of 2008, when the global economic crisis caused major problems for the airlines. A number of factors have changed significantly.
- Fuel is again a factor but the price spike, with an expected high of $115 a barrel this year, is different. Oil inventories are low, but there is ” substantial spare OPEC and refinery capacity, which was not the case three years ago. Second, the monetary expansion that fuelled a surge in financial investments in commodities is ending, which will remove a major upward pressure on fuel prices.”
- Passenger and cargo demand are both on the rise, thanks to higher GDP (gross domestic product), both the increases are smaller than earlier projected, and the “price-sensitive leisure” travellers market fell by 3-4 percent in the first five months of the year as fuel prices rose
- Passenger load factors were “hovering around 77 percent” by April, “more than a full percentage point below the 78.4 percent achieved for international traffic in 2010″, with capacity growing (5.8 percent) faster than demand (4.7 percent)
- Global economic growth is the key risk factor: “High energy prices will certainly have a slowing impact on economic growth. However, the impact will be mitigated by two factors. First, while high oil prices previously triggered recessions, today’s economies (which generate a unit of GDP using just half the energy required in the mid-1970s) are less sensitive. Second, the corporate sector is cash-rich, business confidence is high, and world trade continues to expand at around 9 percent annually. The International Monetary Fund and others have raised global growth projections, which would indicate a recovery in demand growth to the historical 5.6 percent level for the second half of 2011. IATA’s forecast for continued, albeit lower, airline profits despite $110 a barrel oil prices, is dependant on a strong economy to generate sufficient revenues to partially offset higher fuel costs.
GENEVA, SWITZERLAND – Singapore Airlines and Virgin Australia have signed a joint venture agreement that allows them to sell tickets on each other’s international and domestic flights as well as to offer reciprocal frequent flyer programme benefits and lounge access.
Singapore Airlines passengers will get a further 30 destinations, while Virgin customers will be able to fly to 70 more places. Virgin, Australia’s second largest airline, previously known as Virgin Blue, already has alliances with Delta Airlines, Etihad and Air New Zealand. The new agreement is subject to approval from the Australian Competition and Consumer Commission. If it approves the deal, the partnership will start 1 August.
The Virgin deal comes just a day after International Air Transport Association (Iata) downgraded its 2011 airline industry profit forecast to $4 billion, a 54 percent fall compared to its $8.6 billion profit forecast in March.
The lower figure is due to the high oil prices, natural disasters and political unrest, according to Geneva-based Iata.
Links to other sites: BBC, Reuters, Sydney Morning Herald
Iata shows off the Checkpoint of the Future, for more "civilized" air travel
GENEVA, SWITZERLAND – Shorter lines yet greater security at airports, the stuff of dreams? Not so, says the airline industry, determined to push travel into a smoother future, as early as 2013 or 2014. To prove it, the “checkpoint of the future” has just been unveiled in Singapore 7 June by Geneva-based Iata (International Air Traffic Association), the industry’s membership association.
It could mean the end of removing clothes and unpacking carry-on bags, as well as faster lines.
Governments will need to give it their backing, but Iata says it is working closely, through the International Civil Aviation Organization, with 19 governments, including the US, to define standards for the new checkpoint.
“We spend $7.4 billion a year to keep aviation secure. But our passengers only see hassle,” Giovanni Bisignani, Iata director general and chief executive told delegates to the organization’s annual general meeting Tuesday. “Passengers should be able to get from curb to boarding gate with dignity. That means without stopping, stripping or unpacking, and certainly not groping. That is the mission for the Checkpoint of the Future. We must make coordinated investments for civilized flying.”
Iata also published, 6 June, a dramatic reduction in profits forecast for the airline industry; it is easy to see why the airlines want to woo passengers with better boarding conditions.
Biometric travel documents will take on greater significance with the new checkpoints, since a passport’s “biometric identifier” will determine which of three lines a passenger will be directed to: known traveler, normal, and enhanced security.
Iata describes the system:
“‘Known travelers’ who have registered and completed background checks with government authorities will have expedited access.
“‘Normal screening’ would be for the majority of travelers.
“And those passengers for whom less information is available, who are randomly selected or who are deemed to be an ‘Elevated risk’ would have an additional level of screening.”Screening technology is being developed that will allow passengers to walk through the checkpoint without having to remove clothes or unpack their belongings. Moreover, it is envisioned that the security process could be combined with outbound customs and immigration procedures, further streamlining the passenger experience.”
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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”
New aviation MBA programme takes off in Switzerland
Geneva, Switzerland (GenevaLunch) - The latest in a string of newly created MBA programmes in the region has been announced jointly by the International Air Transport Association (Iata) and the University of Geneva (Unige).
The new Executive MBA programme in aviation management, the first in Switzerland, will include coursework in international aviation law, aviation and the environment and airline financing. The programme begins in September 2010.
Professionals from the Iata Training and Development Institute, as well as from the Unige MBA programme will likely be the first to participate.
The announcement comes a day after the University of Lausanne, the HEC and the Tepper Institute in the US announced they were setting up an assets and wealth management MBA, and the AISTS in Lausanane announced two new sports management graduate programmes in conjunction with several universities in the Lake Geneva region.
Security and air safety targeted
Seeking safer skies: greater international cooperation
Geneva, Switzerland (GenevaLunch) - The United States announced Friday 2 April that it is ending its close scrutiny of airline travelers from 14 countries, a programme that has been in place since 25 December 2009. New security measures instead “will screen all passengers based on real-time intelligence, thereby eliminating emergency measures that had focused on citizens from certain countries,” the US Department of Homeland Security says.
The change in policy is the result of Janet Napolitano, Homeland secretary, participating in recent months in several regional aviation security meetings. The US was criticized by some in the aviation industry for taking unilateral security measures that were often ineffective, at a Geneva Iata (International Air Transport Association) meeting in January 2009.
Inter-Europe air traffic remains weak
Worldwide improvement is concentrated in Asia, Latin America
Brands, not flags, must guide the industry to profitability, says Iata head
Geneva, Switzerland (GenevaLunch) – The airline industry is expected to have an overall loss of $9.4 billion for 2009, according to Iata, the Geneva-based air transport industry organization, which released new figures Thursday 11 March. The loss is lower than Iata’s December projected figure of $11b. “More significantly, we now forecast smaller losses in 2010 of $2.8b, compared to our previous forecast of $5.6b.”
The improvement is due to year-end growth in traffic that carried on into January, but it was much led by Asia and Latin America, with the US and Europe far more sluggish.
Growth in passenger demand, world airlines 2006-2009 (Iata)
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“We can be optimistic but with due caution,” Giovanni Bisignani, CEO and director-general says. “Important risks remain. Oil is a wild-card, over-capacity is still a danger, and costs must be kept under control – throughout the value chain and with labour.”
Asian and Latin American carriers posted international passenger demand gains of 6.5 percent and 11.0 percent respectively in January. North America and Europe lagged, with international passenger demand gains of 2.1 and 3.1 percent.
Weather risks to civil aviation in WMO meeting
Geneva, Switzerland and Hong Kong, China (GenevaLunch) – The Geneva-based WMO (World Meteorological Organization) is bringing together about 150 national weather services experts for a week of meetings in Hong Kong, China, to review how to help the airline industry. Modern air travel is in need of more timely and more accurate weather data to improve safety, according to the WMO. The meeting, which starts 3 February, includes aeronautical meteorologists and aviation industry representatives.
Three-quarters of air traffic delays and almost half of the accidents to aircraft are weather-related. The probable increase of extreme weather events will increase the risk to aviation, argues the WMO.
Geneva, Switzerland (GenevaLunch) – The United States Department of Homeland Security (DHS) Secretary Janet Napolitano will be at IATA (International Air Traffic Association) in Geneva 22 January for talks with members of the group about airline safety measures. IATA represents 90 percent of the airline industry, some 230 airlines. Her visit is part of “efforts to work with the airline industry to ensure all flights to the US meet both international and US Transportation Security Administration security standards,” according to the US Mission in Geneva.
Geneva, Switzerland (GenevaLunch) – The US began tightening security checks on international flights into the country Monday 4 January, including using more body scans, but the number of voices objecting to the scannerss is growing. Britain’s prime minister, Gordon Brown, Sunday promised to gradually introduce more of the scanners, but privacy and civil liberties groups say using the machines may break child pornography laws, reports the Guardian. A US congressman, Jason Chaffetz, argues that a bill is needed to protect privacy in the US. The bill has passed the House in Congress and is now under consideration by the US Senate.
The new measures are being taken in the wake of the 25 December suicide bomber attack on a Northwest Airlines flight from Amsterdam, The Netherlands, to Detroit, Michigan in the US.
The world had 2.2 billion air passengers in the 12 months to September 2009, 820 million of which were international travelers, and 140 million of these were international travelers on US routes.
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.
Ken Dunlap, IATA
Geneva's Cointrin airport, 15 December 2009
See all of GenevaLunch’s articles on the annual airline industry Iata meeting in Geneva 15 December
Geneva, Switzerland (GenevaLunch) - The ban on liquids carried onto airplanes could end, but probably not sooner than in two years, says Ken Dunlap, director of security for North America at Iata (International Air Transport Association). Dunlap was talking to journalists in Geneva about industry security plans to return passengers to the more relaxed situation that existed before 2006.
A 2006 terrorist plot targeted 10 international flights, and “the impact on passengers was quick and dramatic,” says Dunlap. “But I don’t think anybody at the time thought these temporary measures would become permanent.”
The key is getting x-ray machines to the point where they will detect liquid explosives.
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.
Giovanni Bisignani, Iata
Cointrin Airport, Geneva
Geneva, Switzerland (GenevaLunch) – The world’s airlines are expected to lose $5.6 billion in 2010, nearly twice earlier forecasts of $3.8b. The losses will come on the heels of an “Annus Horribilis” in 2009 where losses will likely be $11b for the industry worldwide, IATA (International Air and Transport Association) announced Tuesday 15 December. Between 2000 and 2009 airlines lost $49.1b, a Decennis Horribilis, according to Giovanni Bisignani, the industry group’s director general and CEO.
Bisignani, at the group’s annual press conference in Geneva, pleaded for less government regulation and a more competitive environment to ensure that the industry does not suffer another decade with this level of losses. “Government regulation is keeping the airline industry financially crippled,” he noted. “It is 30 percent cheaper to fly today than a decade ago. This is a very competitive industry but governments still refuse to let airlines operate competititively.”
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Geneva, Switzerland (GenevaLunch) – The Geneva-based International Air Transport Association (IATA) released figures 25 June showing that, while still falling, the drop in the number of air travellers in May 2009 was slightly smaller than in previous months, lending credence to reports of a bottoming-out of the recession. Worldwide, travel figures were 9.3 percent down in May compared to May 2008. The load factor in May, the ratio of passengers flown over airline capacity, was lower than a year ago, at 71.2 percent.
International freight travel figures were relatively better as well, though still below levels of last year. “We may have hit bottom, but we are a long way from recovery,” said Giovanni Bisignani, IATA’s director general and CEO.
Solar Impulse computer model in flight (image: EPFL)
Duebendorf, Switzerland (GenevaLunch) – “Yesterday, it was a dream. Today, it is an airplane – tomorrow it will be an ambassador of renewable energies”, Bertrand Piccard told journalists gathered Friday 26 June for the unveiling of his futuristic fuel-free airplane Solar Impulse.
Piccard is the head of a project to build and fly a plane that uses only the sun’s energy to fly non-stop around the world.
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.
