Relief for airlines as fall in traffic slows
HONG KONG/BRUSSELS (Reuters) - Airlines and their suppliers are reporting tentative signs a severe industry recession is bottoming out, sending shares higher on Tuesday.
Airbus, the world's largest producer of passenger jets, said airline traffic had possibly seen "the trough of the recession" and could start to rebound from next year.
"In 2009 we believe total traffic is down 2 percent. In 2010 we may experience a 4.6 percent growth rate," Laurent Rouaud, senior vice president of market and product strategy, said at the Asian Aerospace exhibition in Hong Kong.
In Europe, Air France-KLM (AIRF.PA) said passenger traffic fell 2.9 percent in August but its planes were on average 84.8 percent full, a rise of 1.1 percentage points from the same holiday peak month a year ago.
Its shares rose 6 percent, helping push the DJ Stoxx pan-European Travel and Leisure .SXTP index up 2.4 percent, with traders also citing catch-up by an underperforming sector.
Shares in Aer Lingus (AERL.I), British Airways BAY.L and Lufthansa (LHAG.DE) rose between 2 and 4 percent.
In the United States, the Arca Airline Index .XAL gained nearly 1 percent as shares of most carriers rose.
The Air France figures came as industry data for July showed airline passenger and freight traffic dropped much less sharply year-on-year than in the first half of 2009.
Airport association ACI Europe said passenger traffic at European airports fell 4.3 percent compared with July 2008, versus an average 9.6 percent drop during the preceding six months of this year.
Freight traffic -- a widely watched indicator of economic health -- fell 13.4 percent compared with July 2008, an improvement on the average 22.4 percent decrease during the preceding six months.
"That would fit with our picture," said economist Cristoph Weil at Commerzbank. "We believe we will see a strong recovery in Q3 and Q4 in the euro area."
Air France-KLM said its cargo business had in August confirmed signs of stabilisation seen in recent months.
Economists say the global economy looks to be pulling out of recession, with the OECD predicting a renewal of growth for the United States and euro zone in the third quarter.
But, like the airline industry, the broader economy remains on life support and G20 finance ministers agreed on September 5 to keep stimulus measures in place.
ACI Europe's numbers were helped slightly by weak comparative figures in July 2008, when the economic downturn first started to bite and passenger data entered negative territory for the first time in six years.
But weak comparables account for only about a fifth of the improvement in freight volumes, ACI archive figures show.
Airbus EAD.PA and rival Boeing Co (BA.N) are headed for their worst annual order tally in at least 15 years as airlines cancel or defer almost as many planes as they buy.
The world's airlines are expected to post total 2009 losses of $9 billion including at least $6 billion (3.6 billion pounds) in the first half, says the International Air Transport Association.
Most major U.S. carriers posted declining traffic for August last week, but monthly load factors were mostly higher, aided by capacity cuts that are expected to continue.
"Going back to May, you've seen the pace and declines for airline traffic slow considerably," said Basili Alukos, a U.S. analyst for Morningstar. "It's not surprising to see airline traffic still negative even though there are signs that the economy is improving."
A Boeing executive said any recovery in the economy would not translate into recovery in demand for aircraft until 2012.
"Next year will be a year of economic recovery, 2011 will be a year of airline industry recovery and then in 2012, airlines will probably increase their demand for new airplanes," Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, told Reuters in Hong Kong.
And once airlines fly out of recession, they will be haunted by big questions on costs, especially fuel, Airbus executive Rouaud said.
Oil prices rose 4.5 percent on Tuesday, their biggest gain in nearly three weeks. NYMEX crude for October delivery rose $3.08 to settle at $71.10 a barrel, marking the largest percentage increase since August 19. London Brent crude rose $2.89 to $69.42 a barrel.
(Reporting by Sui-Lee Wee in Hong Kong and Pete Harrison in Brussels; Additional reporting by Brian Love, Joanne Chiu, Karen Jacobs, Richard Valdmanis, Alison Leung and Helen Massy-Beresford; Writing by Tim Hepher; Editing by David Holmes, Gary Hill)
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