Emirates profits slide

Emirates has posted an 86% fall in profits, following rising oil prices and currency devaluations.

The Dubai-based carrier recorded a profit of just $62m in the six months to 30 September, compared with $452m in the same period last year.

Virgin pilots balloted over industrial action

The Financial Times reports that Virgin Atlantic’s largest pilots’ union — which the airline has yet to recognise — has started to ballot its members about industrial action that could lead to strikes over Christmas.

The Professional Pilots Union said anger at the airline’s recent review of pilot benefits was “merely a symptom” of its dissatisfaction with “the continued broken industrial landscape” within Virgin.

We will provide updates as and when we receive them.

Oil price drops

The price of oil [has fallen] below $60 a barrel for the first time in more than a year amid fears that the world is facing a supply glut,” and that the drop “has confounded the expectations of experts, who barely two months ago were contemplating the prospect of supply shocks sending oil back to $100 a barrel for the first time since 2014.  In light of the drop, IAG’s share price rose 1.4%, while easyJet’s rose more than 4%.

This fall could give some breathing space for some carrier that have been struggling recently.

The latest on the situation at Flybe

Flybe shares soar on talk of buyout
The media’s financial writers continue to focus on the future of Flybe, with many claiming IAG has joined the race to buy the regional carrier. Reports focus on the Exeter-based airline’s share performance over the past few days which has seen sharp increases as buyout speculation continues. IAG has declined to comment on the speculation.

Virgin Atlantic in talks to buy Flybe

Almost every weekend newspaper ran stories about Virgin Atlantic being reportedly in talks over a possible buyout of Flybe. The headlines of this emerging story reported that Flybe’s share price rose more than 70% when the news broke last week. Additionally reporters noted that Virgin Atlantic’s previous attempt at launching a shourthaul airline (Little Red) was a failure, and that if Virgin Atlantic were to acquire routes between London and Scotland, it would put them in direct competition with their fellow Virgin business, Virgin Trains. Some sources additionally reported speculation that IAG is also interested in acquiring Flybe. Virgin Atlantic and IAG have both declined to comment on speculation and rumours.

Travel expert Simon Calder notes that taxpayers will subsidise a new Flybe route between Heathrow and Newquay, with the airline “losing around £7000 per hour”.

Flybe strikes lifeline deal 

Budget carrier Flybe has struck a lifeline deal to keep flying by selling one of its hangars for £5 million.

The airline will pay an annual rent of £515,000 for the facility at Exeter and Devon Airport, reports the Daily Mail.

Flybe is under pressure to stay afloat, after warning its full-year losses are set to hit £22 million, blaming falling demand for flights, rising fuel costs and the weaker pound.

UK signs ‘open skies’ deal with US

Willie Walsh, chief executive of parent company IAG, has hailed a new ‘open skies’ agreement with the US.

A number of outlets have reported the pact, which will allow airlines to continue transatlantic flights without interruption after Brexit, when the current US-EU agreement ends.

Willie Walsh told the Financial Times: “It’s critical that Britain maintains full access to international aviation markets so it can continue to develop its global trading links. This agreement is a significant positive development which we welcome.”

The BBC notes that the deal is one of nine the government has secured. The others are with Albania, Georgia, Iceland, Israel, Kosovo, Montenegro, Morocco and Switzerland –  with an agreement with Canada reported to be imminent.

Gatwick unveils £½bn plan to move runway 12 metres 

Gatwick plans to spend up to £500 million to shift its emergency runway by 12 metres, bringing it into full passenger use and challenging Heathrow.

In an interview with The Times, Stewart Wingate, Gatwick chief executive, said that the airport would spend between £400 million and £500 million on the revamp. The move would mean the runway would comply with international safety regulations as the two runways are currently too close together to be used simultaneously. New taxiways and stands will also be created.

It wants to bring the new runway into operation by the summer of 2025. A major planning application would be lodged in early 2020. This would allow Gatwick to expand into a two-runway hub only six months before the expected completion of a third runway at nearby Heathrow. 

New set of headwinds set to send Flybe to another full-year loss  

UK media report that the combined £29 million impact from higher fuel costs, a weaker pound and less demand is set to send Flybe spinning to a full-year loss.

The airline’s profit warning yesterday immediately sent its shares down by more than a third to a record low. In a trading update, the Exeter-based Flybe said that it expected to make a full-year, pre-tax loss of £22 million, far more than analysts had forecast.

However, it said that a £10 million gain from the end of an onerous lease means that the overall loss would be closer to £12 million. 

Turbulence ahead, but Ryanair will power through 

Last week Ryanair announced their half year results.

The company posted a seven per cent drop year on-year in net profits to €1.3 billion for the half-year to the end of September.

The company flew 76.6 million passengers during the half year, up six per cent, and also reported an eight per cent rise in revenues to €4.8 billion. However, its average fares dropped three per cent and costs also increased. Fuel costs rose 21 per cent, while staff costs increased 32 per cent as pilots won pay increases.

The airline has also been paying out compensation to passengers affected by strikes by Ryanair crew and air traffic control in France. The media highlight that Chief Executive Michael O’Leary said that the airline had made ‘good progress’ with the unions and predicted more airlines failures this winter: “Winter trading may be positively impacted by the rate and timing of other airline failures which is already creating a ready supply of well-trained pilots and cabin crew for [2019] growth.” On the topic of Brexit, O’Leary admitted that disruption to flights after Brexit was ‘unlikely’ claiming such a disruption would be ‘politically undeliverable’ and lead to the fall of the government.   

Norwegian admits rising oil price is making life tough

The rising oil price and the cost of compensating passengers affected by planes being taken out of commission because of faulty engines has cut profits at Norwegian Air Shuttle.

However, shares in the airline rose 16 per cent on the Oslo market to NKr211.80 as Norwegian revealed plans for a sale and leaseback joint venture for its 158-strong fleet. Analysts said that could release up to $1 billion to bolster Norwegian’s balance sheet. 

Airlines attack decision not to freeze long-haul duty rate in the UK

The UK press dedicate parts of their budget coverage to criticism from IAG of the Chancellor’s announcement that long-haul Air Passenger Duty will increase. Short-haul APD will be frozen until 2020-21.

An IAG spokesperson is quoted as saying: “It’s ironic that this Brexit budget has undermined Britain’s global competitiveness by uppping Air Passenger Duty, the world’s highest aviation tax, again.

Last year, British Airways’ passengers paid £682m in APD. We want to offer more flights to key markets, like our European competitors, but APD stifles route development. This out-dated tax also costs UK jobs and growth. If Britain wants to compete on the global stage post Brexit, it should be scrapped now.” The industry groupAirlines UK added: “APD is nothing but a tax on Global Britain. Rates are already the highest in the world.”