Losses increased at Cardiff Airport as the business was hit by the departure of airline operator Bmibaby.
A 2011 operating loss of £302,000 had grown to £1.7m loss a year later while pre-tax losses increased year-on-year from £924,000 to £2.38m.
Turnover at the airport, which announced in March it had struck a £52m buyout deal with the Welsh Government, fell from £16.7m to £14.8m for the year to 31 December 2012.
Notes accompanying the newly filed accounts for Cardiff International Airport Ltd said passenger numbers fell by 16 per cent during the year to 1.02 million, “largely due” to the withdrawal of Bmibaby from the airport in October 2011.
Looking ahead, the report said: “Despite a further fall in passenger numbers during 2012, there are signs the next annual movement in passenger numbers will be positive, with growth expected in low cost and charter activity during 2013.”
Chief executive Jon Horne said: “We are optimistic about the future potential of the airport having recorded our fourth month of growth in passenger numbers.
“August figures show passenger numbers totalling 148,220 for the month which is an increase of 14 per cent over August 2012, continuing the trend of May, June and July.
“We have already announced increased services for both summer and winter 2013 and are working hard to get more airline capacity in place.
“We are confident we shall continue to make progress this year and remain focused on delivering more capacity and an improved route network for the people of Wales.”
Sourced by Inside Media
A pre-tax loss of £40.7 million was reported this morning by Flybe against £6.2 million in 2011/12.
The struggling regional airline said cost savings of £25 million in the first phase of a turnaround plan had been exceeded as it cut UK staff numbers by more than 20% and pilots agreed a 5% pay cut
A further £30 million of savings are being targeted for the current financial year
The airline is selling its Gatwick take off and landing slots to easyJet for £20 million and has deferred delivery of 16 Embraer E175 regional jets.
Flybe said it welcomed “growing political momentum” to devolve Air Passenger Duty policy to the UK regions, as well as growing pressure to create a more coherent regional aviation policy for the UK as a whole.
“Flybe and its customers would be significant beneficiaries of both of these developments,” the airline said.
Chairman and chief executive Jim French said: “Flybe has exceeded its target of taking out £25 million from its cost base during 2013/14 and will deliver around £40 million in savings in this current financial year, expected to rise to £50 million annualised savings from 2014/15 onwards.
“In the last few months we have streamlined the business, reducing UK-based headcount by more than 20%. We have also made major progress in reducing the cost of our supplier base.”
He claimed that its decision to exit Gatwick “acted as a clarion call for action and debate on the injustice of the grossly unfair ‘double hit’ nature of the APD tax on the UK regions”.
French said: “The plans being developed in Edinburgh, Cardiff and Belfast are aimed at reducing this burden, and bode well for our customers, the regional economies we serve and Flybe itself. We will support these developments and work closely with those seeking to bring about change.
“Our results for 2012/13, while expected, are nonetheless disappointing. During the year, we have taken difficult decisions as part of our turnaround plan, which have affected all our people. Challenging as they have been, these decisions were critical to ensuring the future success of Flybe.
“We expect to see considerable reductions in the cost base of the business in both this year and the next, thanks to the actions taken during the course of 2013 that are targeted to be complete later this year. The group is now more strongly placed for the future.”
Sourced from Travel Weekly
Total cash was £54.7m at 31 March 2013 (2012: £67.6m), and net assets of £48.1m (2012: £89.4m).
Target cost savings of £25m under Phase 1 of turnaround plan were exceeded, with £30m of annual cost savings now secured for year 2013/14 onwards.
Phase 2 of the plan is being implemented, targeting a further £10m of savings in 2013/14, rising to around £20m from 2014/15. This would take total annual cost savings to some £50m from 2014/15 onwards.
UK based head count is being reduced by more than 20%.
Agreement in principle has been reached with the British Airlines Pilots Association (‘BALPA’), for up to a 5% reduction in salary in return for extra time off.
The turnaround plan is being financed through:
® The transfer of arrival and departure slots at London Gatwick Airport (‘LGW’) to easyJet for £20m, subject to a simple majority shareholder approval; over 54% of shareholders have given their irrevocable approval to the transaction;
® The deferral of 16 Embraer E175 (E-series regional jet) aircraft deliveries, saving £20m of cash outflow for pre-delivery payments in winter 2013/14;
® The disposal of various other minor assets.
Update on ‘Delivery and Future Direction’
The actions taken so far under Phases 1 and 2 of Flybe’s turnaround plan, Delivery and Future Direction, are now expected to deliver some £40m of annual cost savings in 2013/14 (against the original target of £25m), and targeted to reach an annual savings figure of around £50m by 2014/15 onwards.
Jim French CBE, Chairman and CEO, stated:
“Flybe has exceeded its target of taking out £25m from its cost base during 2013/14 and will deliver around £40m in savings in this current financial year, expected to rise to £50m annualised savings from 2014/15 onwards. In the last few months we have streamlined the business, reducing UK-based headcount by more than 20%. We have also made major progress in reducing the cost of our supplier base.
“Our announcements on 23 May 2013 have acted as a clarion call for action and debate on the injustice of the grossly unfair ‘double hit’ nature of the APD tax on the UK regions. The plans being developed in Edinburgh, Cardiff and Belfast are aimed at reducing this burden, and bode well for our customers, the regional economies we serve and Flybe itself. We will support these developments and work closely with those seeking to bring about change.
”Our results for 2012/13, while expected, are nonetheless disappointing. During the year, we have taken difficult decisions as part of our turnaround plan, which have affected all our people. Challenging as they have been, these decisions were critical to ensuring the future success of Flybe.
“As outlined above, our turnaround plan has involved considerable efforts to reduce the cost base of the business. Inevitably, and sadly, this process has to date involved the departure of around 490 people from the business. We do not underestimate the effect of these difficult decisions on those staff leaving and the friends and colleagues that they leave behind.
“I would like to thank all of our employees, staff and union representatives for their hard work, support and resilience through what is proving to be a very challenging period for the business and its staff.
“Flybe remains Europe’s largest independent regional airline, flying over 200 routes from more than 100 airports across 23 countries. We have a leading brand, a strong reputation for service excellence and a standing amongst our peers that means we can, and do, undertake business with all the major airline groups in Europe. We continue to make real and measurable progress in Europe, with our contract flying business in particular being a stable, income-generating entity which is well positioned for further growth. With Flybe’s future cost base significantly improved, the business will now move to reclaim its position as Europe’s leading regional airline.”
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Virgin Atlantic has reported an increase in annual losses despite a rise in revenue in the year to February.
The carrier lost £93 million, up from £80 million a year earlier. However Virgin Atlantic’s group pre-tax loss was lower at just under £70 million thanks to a one-off exceptional item and a profit at Virgin Holidays.
The airline blamed rising costs and tough economic conditions for the losses, but announced a 5% increase in annual revenue to £2.87 billion.
Passenger numbers rose year on year by 188,000 to 5.5 million.
Airline chief executive Craig Kreeger said: “Last year saw a double dip recession, a continued weak macro economy, and an Olympic Games which . . . severely dented demand for business travel.”
Kreeger, who took over running Virgin Atlantic in February, has pledged the airline will turn a profit in two years.
He reported a 9.2% rise in premium economy and Upper Class passengers year on year, coupled with an overall rise in load factors.
Virgin Atlantic is now 49% owned by US carrier Delta Airlines, which bought out Singapore Airlines’ long-held stake in December.
Kreeger said: “Virgin Atlantic has a programme of measures which I’m confident will improve our financial performance considerably and put us firmly on the road to a return to profit in spring 2015.”
The carrier launched its first short-haul and domestic services in March, with new brand Little Red operating a series of shuttle services between Heathrow and Manchester, Edinburgh and Aberdeen.
Kreeger said: “This marks a step change in Virgin Atlantic’s business model.
“Already, 27% of Little Red passengers are connecting onwards with Virgin Atlantic at Heathrow. This will be a significant revenue generator for the business.”
He added: “The alignment with Delta will give Virgin Atlantic passengers greater connectivity throughout North America meaning a more attractive offering and will greatly enhance Virgin’s sales base and revenue opportunities across the US.”
Kreeger insisted: “The enduring strength of the Virgin Atlantic brand has not wavered.”
He reported a 6% year-on-year increase in sales at Virgin Holidays and said: “Virgin Holidays continues to be the UK’s preferred choice in long-haul trips worldwide.”
Sourced by Travel Weekly
By Alan Dron
Air Malta expects to sharply reduce its losses this year as it enacts its turnaround plan, according to CEO Peter Davies.
Speaking on the sidelines of the European Regions Airline Association (ERA) annual conference in Edinburgh, Davies said he anticipates Air Malta’s loss for 2012 would be around €15 million ($19.6 million), compared to the figure of around €55 million he inherited two years ago.
He said the carrier’s major restructuring plan is on track, largely due to the €130 million in state aid approved by the European Commission (EC) in June 2012.
He said that Air Malta was in a better position than Cyprus Airways, which is reportedly facing bankruptcy if it does not receive financial aid. That, he believed, was a reflection of the parlous state of the Cypriot economy. By contrast, “The economy in Malta is very strong. It’s been managed exceptionally well and unemployment is very low,” he said.
Sourced by ATW
An internal memo from new chief executive Craig Kreeger seen by the newspaper said the airline’s financial performance is “well behind where we anticipated” following a £80.2 million deficit last year.
The airline confirmed the detail of the memo in which Kreeger imposes an immediate pay freeze and initiated a broad-based cost cutting plan. Virgin Atlantic said the UK airline industry had faced “continued challenges over the past year”.
Plans to increase long-haul revenues by £50 million and make savings of £40 million would not be enough to get the airline back into profitability, said Kreeger.
“The 2012-13 financial airline performance will be a significant loss. Two years of significant cash losses have depleted our resources and decreased our ability to invest,” he said.
This meant the carrier would have to make “some tough calls”.
“One of those decisions is to recognise and communicate the reality that we cannot afford any pay increases this year. It is not ideal that this is the first big decision I have to take,” he added.
Virgin Atlantic faces higher fuel costs and greater competition on transatlantic routes from the British Airways/American Airlines joint business.
The airline has responded by forging its own partnership on the North Atlantic with Delta Air Lines becoming a 49% shareholder and creating its own UK domestic arm to feed traffic onto long-haul services from Heathrow. More fuel efficient aircraft are also being introduced to the fleet.
“These improvements will result in considerable financial savings,” the carrier said. “The airline has also made the decision to suspend salary increases for this financial year.”
Sourced from Travel Weekly
The company was boosted by the London Olympics and improved passenger satisfaction levels.
Passengers using Heathrow rose to 70 million from 69.4 million in 2011 but the numbers using Stansted – which has since been sold to Manchester Airports Group for £1.5 billion – dropped by 500,000 to 17.5 million
The sale of Stansted is expected to completed by the end of the month.
The group said it will make submissions to the independent Airports Commission headed by Sir Howard Davies into UK airport capacity during the year.
“The main development in UK aviation policy in the last year related to the debate on hub airport capacity, the importance of which is underlined by the fact that in 2012 Heathrow, the UK’s only hub airport, once again operated close to its maximum permitted annual flight numbers,” the company said.
“The hub airport model used by Heathrow and its competitors uses transfer passengers to support flights to long-haul destinations which would not be viable using local demand alone.
“But unlike its rivals in France, Germany, the Netherlands and Dubai, Heathrow is full and its capacity constraints prevent any meaningful increase in the numbers of flights and routes.
“This means the country’s ability to trade with emerging economies is constrained, with potential long-term consequences for UK trade, jobs and economic growth.
“At the start of 2012, whilst the importance of hub airport capacity was beginning to be accepted by the UK government, a third runway at Heathrow was being excluded as a potential solution.
“However, during the year the government established the independent Airports Commission, chaired by Sir Howard Davies, which has been tasked with identifying and recommending the options for maintaining the UK’s status as an international aviation hub.
“It is expected to do this by assessing the UK’s international connectivity needs and recommending the optimum approach for meeting these.”
The Commission is expected to produce an interim report by the end of 2013 which will set out its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK’s global hub status.
A final report is expected by summer 2015 which will set out the commission’s assessment of the options and the economic, social and environmental impact and a recommended solution.
Heathrow chief executive Colin Matthews said: “2012 was an historic year for Heathrow. We gave a warm welcome and a smooth journey to thousands of Olympic and Paralympic athletes, and greeted a record 70 million passengers over the 12 months.
“We also achieved record customer satisfaction levels, with three quarters of people saying they had a ‘very good’ or ‘excellent’ experience at Heathrow.
“Our capital investment programme continued, with over £1 billion spent on improving the airport, mainly on the new Terminal 2 which opens next year.
“We also completed our refinancing programme, successfully issuing another £3 billion of bonds to put us on a stable, long-term financial footing.”
Sourced from Travel Weekly
International Airlines Group will slash capacity at Iberia by 15% the group has confirmed.
In a statement IAG, owner of British Airways, said “no agreement has been reached between Iberia and its trade unions over the airline’s transformation plan proposals”. It added: “Iberia will, therefore, press ahead with the previously announced capacity reduction of 15% for 2013.”
Under the plans, 4,500 jobs could go along with 25 aircraft being removed from the fleet. Already Iberia has started cutting routes and optimising services. The Spanish unions are vehemently against the cuts and have threatened to stage more strikes if they go-ahead.
In a statement IAG added it would: “move forward on alternative plans to return Iberia to break-even, in terms of operating cash flow, by the second half of this year and restore Iberia to an acceptable level of profitability by 2015.”
Willie Walsh, IAG chief executive, said: “We’re disappointed that no agreement has been reached. Iberia is ready and willing to negotiate with the trade unions. We are determined and united to implement the necessary changes to secure the future survival and viability of Iberia”.
Sourced from TTG Digital
In a revised proposal, Iberia said it offered 3,147 job cuts, 30% fewer than in the original plan, lower wage reductions and capacity cuts of 10% this year rather than an initial plan for 15%.
But the six unions that represent Iberia’s ground and cabin crews rejected the plan in a joint statement yesterday, calling it far from the terms that had been agreed during weeks of talks with management.
The unions did not say when they would go on strike, Reuters reported. Pilots union Sepla also rejected the new restructuring plan, but stopped short of supporting strike action.
The airline had set a January 31 deadline to reach a deal with the unions and has threatened unilateral cuts if staff failed to support the plan.
Iberia said the latest plan enabled the airline to “return to profitability, with the least possible sacrifice” by its workers. The IAG board is due to meet today to respond to the rejection of the revised cost cutting plans.
Sourced from Travel Weekly
Thomas Cook continues to expect this year to be “challenging” citing the economic backdrop and difficult trading environment with “particularly poor” performances in its North American and French businesses.
The message came after the group revealed steeper winter half year losses of £643 million, including £300 million of non-cash goodwill impairments, up from £197.9 million.
The seasonal underlying loss from operations was £263 million, an increase of £97m on the same time a year earlier.
This reflects the inclusion of losses from acquired businesses in Russia (£10 million) and the Co-op in the UK (£15 million).
“The difficult trading environment increased losses, in particular the impact of MENA on the French result (£17 million increased loss) and the poor trading in the North American business (£25 million worse than prior year),” Cook said.
“Seasonal losses in the UK business are flat year on year excluding the acquired Co-op seasonal losses, whilst within Central Europe, our German business performed well with a 58% reduction in the seasonal operating loss at constant currency.”
Looking forward, the company said: “Whilst our booking position for the second half has improved trading will be dependent on how well the group performs during the important lates market.”
Revenue in Cook’s UK business was down by almost £30 million to £993.1 million in the six months to March resulting in the underlying loss increasing by £14.9 million to £173.6 million.
This reflected a cut in capacity in its mainstream and airline operations.
Controlled distribution increased to more than 82% due to the merger with the Co-operative group and Midlands Co-operative agencies.
“As previously announced, a rationalisation programme is underway to maximize the efficiency of the combined store portfolio with the main benefit of the merger expected to be seen in the second half of the year,” Cook said.
Chief executive Sam Weihagen said: “This has been a period of significant change for the group.
“At the beginning of this month we were delighted to announce the agreement with our banking group of longer term and more flexible funding.
“This, combined with the sale of Thomas Cook India, the sale and leaseback of some of our aircraft and the disposal of other non-core assets, provides the group with a much stronger financial platform.
“From this platform, we can re-energise our business and begin to rebuild profitability, reduce debt and continue to provide a fantastic holiday experience for our customers.”
Sourced from Travel Weekly