Reuters - Video

EDITION: U.S. | U.K. | IN

Business

Fasten seat belts, turbulence ahead?

Friday, Aug 01, 2014 - 02:30

British Airways owner IAG reports a 55 percent rise in profits - a day after Lufthansa's Q2 numbers point to a sector where fortunes are, at best, mixed - and where investors have to contend with growing levels of geopolitical risk. David Pollard reports.

▲ Hide Transcript

View Transcript

Go back a few decades, air travel was altogether a classier affair. Now, for most, though, it's getting from A to B as quickly as you can. And as cheaply. Ryanair has set the low-cost mould - and it's still paying off. Their first quarter results - unveiled this week - showed profits doubling compared to a year earlier. Some surprise then that IAG is also reporting a sharp swing to profit. It's up 55% per cent in the second quarter thanks to a recovery at Iberia, and its deep cuts in staff and in costs. Crucially it also did what investors were looking for by reaffirming its targets. Darren Sinden of Titan Investment. SOUNDBITE (English) DARREN SINDEN, TRADER, TITAN INVESTMENT: ''It's not good enough at the moment for a company to, you know, meet or even exceed earnings forecasts. What they need to is to be able to give a positive outlook for the coming quarters, and in an uncertain economic environment, it's very few that can actually do that.'' Lufthansa is still struggling in the no-frills environment. It reported lower than expected second-quarter profit as ticket prices fell on North American, Asian and European routes - recent strike action also weighing on the numbers. It and rival Air France-KLM have both issued profits warnings in the past eight weeks. Both also announcing plans for more low-cost operations. Brenda Kelly of IG says that's not the only challenge. SOUNDBITE (English) BRENDA KELLY, CHIEF MARKET STRATEGIST, IG: ''Lufthansa is looking a little bit short-changed at the moment and they've had a number of strikes over the last six months which have clearly impacted both morale and, of course, the actual days of trade as well ... Certainly the fact that it is so close the problems in Ukraine and Russia means it may very well have to affect its flight path, and of course there are the insurance premiums which will be driven up.'' With Malaysian Airlines flight MH17 seemingly shot out of the sky, Ukraine adds to a growing list of geopolitical concerns for airlines. Just recently flights to Israel were banned for several days because of the conflict in Gaza. Flights to and within West Africa are now under scrutiny because of a new threat: ebola. SOUNDBITE (English) BRENDA KELLY, CHIEF MARKET STRATEGIST, IG: ''While the world doesn't seem to have woken up to the fact that this is quite a major problem, there does seem to be signals at the moment that this is going to be next point of call.'' Airline industry body IATA says it's monitoring developments in the ebola outbreak - in close coordination with the World Health Organisation.

Fasten seat belts, turbulence ahead?

Friday, Aug 01, 2014 - 02:30

Top News »

Investing 201 »

Arian Foster = BlackBerry? Arian Foster = BlackBerry?

Fri, Oct 25, 2013 - (3:16)

Don’t miss these red flags for IPOs Don’t miss these red flags for IPOs

Thu, Oct 10, 2013 - (2:34)

Copycat currency trading Copycat currency trading

Wed, Oct 02, 2013 - (2:28)

When to dump a winner When to dump a winner

Tue, Sep 24, 2013 - (1:55)

Where gold might again attract Jim Rogers Where gold might again attract Jim Rogers

Thu, Sep 19, 2013 - (2:05)

Why savings interest rates won't budge Why savings interest rates won't budge

Fri, Sep 13, 2013 - (2:09)

Buy local? ETFs try the trend Buy local? ETFs try the trend

Thu, Sep 05, 2013 - (2:42)

The better bond funds The better bond funds

Wed, Aug 07, 2013 - (2:40)

Best bargain in 40 years? European stocks Best bargain in 40 years? European stocks

Thu, Aug 01, 2013 - (2:24)

Invest like an activist Invest like an activist

Fri, Jul 26, 2013 - (2:49)

Money Clip »

3 things to do before disaster strikes 3 things to do before disaster strikes

Wed, Sep 18, 2013 - (1:39)

Your must-do money list Your must-do money list

Wed, Sep 11, 2013 - (1:24)

The worst "best" financial advice The worst "best" financial advice

Wed, Sep 04, 2013 - (1:42)

Forget gold: The case for REITs Forget gold: The case for REITs

Fri, Apr 26, 2013 - (1:19)

3 rules for buying a house now 3 rules for buying a house now

Thu, Apr 18, 2013 - (1:39)

“Stalking” your dream home - Money Clip “Stalking” your dream home - Money Clip

Wed, Mar 27, 2013 - (2:50)

3 hidden tax deductions - Money Clip 3 hidden tax deductions - Money Clip

Thu, Mar 21, 2013 - (1:33)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Still missing – MH370 Still missing – MH370

Fri, Sep 05, 2014 - (2:05)

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

Burning Together Burning Together

Mon, Sep 01, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Wed, Jul 02, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, Jun 20, 2014 - (3:04)