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More turbulence for Europe air industry

Wednesday, June 11, 2014 - 02:31

June 11 - Airbus loses a multi-billion dollar order, Lufthansa warns on profit and Flybe chief, Saad Hammad, tells Reuters there's still 'caution' on the economy. Hayley Platt asks whether Europe's aviation industry can ever hope for better times.

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Landing a profit. After four years in turbulent skies, Flybe in back in the black. Europe's largest regional airline delivered a pretax profit of just over eight million pounds. That compares to a loss of over 40 million a year earlier. CEO Saad Hammad told Reuters it's largely due to some aggressive cost cutting. SOUNDBITE: Saad Hammad, CEO, Flybe Group, saying (English): "I think the secret going forward is discipline. Discipline in terms of capital deployment, discipline in terms of revenue and relentless focus on the customer, discipline in terms of cost and managing our unit cost program." It's a different story for Germany's Lufthansa. After a surprise profit warning and confirming it wouldn't meet targets for at least two years, its shares plunged 11 percent and dragged others in the sector down, too. Europe's largest airline blamed stiff competition, particularly from Gulf carriers such as Emirates and Qatar, as well as strikes by its workers. Though some believe the strikes are only a small part of the picture. Reuters Breakingviews, Olaf Storbeck. SOUNDBITE: Olaf Storbeck, Columnist, Reuters Breakingviews, saying (English): "The strikes in particular are surprising because they always said that the strikes had cost them about 70 million euros but they lowered their profit forecast by 300-500 million euros for the full year for this year, so this only really a tiny bit of the whole thing." There was further disappointment at Europe's largest aerospace group. Airbus lost a multi-billion dollar deal after Dubai's Emirates Airline cancelled its entire order for 70 Airbus A350s. It apparently prefers the larger A380 Superjumbo. The decision will also hit engine maker Rolls Royce too. Flybe's boss says it's an indication that airlines are still being cautious despite the improving economic climate. SOUNDBITE: Saad Hammad, CEO, Flybe Group, saying (English): "It's not just a European phenomenon, I think it's a worldwide phenomenon. People are coming to grips with the need to be disciplined and not get carried away by the global economic recovery." The A350, which is a direct competitor of Boeing's 787 Dreamliner, has been beset by years of delays and runaway costs. But Airbus says it is confident the cancelled orders would be taken up by other airlines.

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More turbulence for Europe air industry

Wednesday, June 11, 2014 - 02:31