Friday, June 26, 2009

Recession bites

Airbus A319 - soon in the Adria Airways livery
The CEO of Adria Airways, Tadej Tufek, has recently told a Slovenian newspaper that this year will be one of the most difficult in the airline’s history. Although he hopes for a better outlook he says the airline will not be opening any new services during the 2009/10 winter period. The airline’s CEO said that he is reasonably happy with the 2008 result. “The Slovenian EU presidency in the first half of 2008 was an important factor for the passenger increase. This means that we have had 15% less passengers and revenue in the first quarter of this year compared to the previous one. We are trying to increase the number of passengers and the frequency of our flights to and from the Western Balkans to make up for what we have lost on services to and from Munich, Frankfurt, Zurich and Brussels”, Tufek said. Asked about what measures Adria Airways has taken to fight the crisis, Tufek said, “The most important process is fleet optimisation. We have introduced the fourth 86-seat Canadair CRJ900 which allows us to adapt to market situations more efficiently. We also fly 160-seat Airbuses, but it is hard to fill the seats on these outside of the charter season, which only lasts four months a year. We have therefore leased one of our Airbuses to a Libyan airline (Afriqiyah Airways). Two of the remaining three will be sold during this fall and two smaller A319 Airbuses will be introduced. I think that this way we will be able to utilize our capacities to a greater extent. Long-term leasing is the best way to finance the fleet change, because prices today are 40% lower than a year ago. We have also cut our operating costs by 11% in 2008, focusing on suppliers’ costs. We have postponed investments that are not necessary at this time. However, the introduction of five new planes in our fleet mandates the employment of new resources, so we are quite constrained when it comes to lowering labour costs”.

The first man of Slovenia’s national carrier has also said that he is happy with the cooperation with Ljubljana Airport and that the airline will not introduce any new services during the 2009/10 winter season which begins in late October. In 2008, Adria increased the number of transported passengers by 27%, largely because of the Slovenian EU presidency. In the first quarter of this year, Adria registered a 14% decline in passenger numbers. However, because of Slovenia’s EU presidency in the first 6 months of last year, Tufek believes that 2009 should be compared to 2007. When compared to 2007, Adria has recorded more passengers in the first 4 months this year.

It should be noted that almost all airlines in Europe have been affected by the global financial crisis. The only airline which is reporting passenger and profit growth in 2009 is Turkish Airlines. The Turkish national carrier announced yesterday that the airline has ordered 7 Airbus A330s and 7 Boeing B777s. Another airline reporting relatively good passenger figures is Swiss International Airlines. On the other hand, Malev Hungarian Airlines will end services to Ljubljana and Podgorica starting from the 2009/10 winter season due to cost cutting which will see off unprofitable lines.

2 comments:

  1. It's the right move by Adria to downsize 4 planes (3xA320s to 319s, CRJ1000 to CRJ900), especially since they operate many long routes which with an empty plane would be quite costly!

    The question here (as with many of the other exYU airlines) should be: if the economic situation means that ordering new planes now comes at a discount, why not order now for delivery in say 4 or 5 years time (when many of the order books are presently finished)?

    Finance/leasing shouldn't be an issue given that many airlines are part- or wholly-government owned, perhaps OU needs to line up its A320 replacements now at those good prices (perhaps even getting a better deal than last year's one for the 4 319s).

    It would be playing the low-cost airlines at their own game...

    ReplyDelete
  2. You should note that new planes cost on average just 2-3% less than in 2008, while leasing companies cut their prices virtually in half.

    Leasing is the way to go right now.

    ReplyDelete

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